Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

NEW WRIT

For Weston-super-Mare, in the room of Sir Ian Leslie Orr-Ewing, deceased.—[Mr. Heath.]

PRIVATE BUSINESS

BLACKPOOL CORPORATION BILL

As Amended, considered; to be read the Third time.

Oral Answers to Questions — NATIONAL FINANCE

Purchase Tax Reductions

Mrs. Mann: asked the Chancellor of the Exchequer whether he is aware that many retailers are complaining of losses incurred through reductions given to customers on stock bearing full rates of Purchase Tax, whilst others refuse to pass on reductions of Purchase Tax until such stock is sold; and whether he will introduce legislation to provide for uniformity of practice by wholesalers and retailers in passing on Purchase Tax reductions, wholly or in part, to their customers.

The Chancellor of the Exchequer (Mr. Derick Heathcoat Amory): I am aware of the facts stated. The situation is open to the free play of trade competition and I am not clear that legislation to enforce uniformity, even if practicable, would be in the interest of the consumer.

Mrs. Mann: But is the Chancellor aware that already permission is given to clear old stocks, according to the reply given on 25th April, and there is no check on when old stocks are finished and new stocks begin? Is not this very

confusing and does not it tend to make fun of the Purchase Tax relief?

Mr. Amory: I know that the hon. Lady, for whose views in general I have very great respect, and I hold different views about this particular matter, but I would remind her that, some years ago, the Government set up an independent committee to consider the question whether there was any way to provide compensation to retailers for their Purchase Tax-paid stocks in the event of a reduction in Purchase Tax. That committee said that it could find no feasible way in which this could be done. The present position is that it is quite legal for a retailer to base his selling price on the price of the goods, including Purchase Tax, if he has paid it. Equally, he is free to reduce that price at any moment if he wishes to do so. I believe that that is the fairest method that we can discover and it is also the method which is most favourable to the consumer.

Profits Tax

Mr. Hoy: asked the Chancellor of the Exchequer whether he has considered the representations of the Scottish Rugby Union regarding the proposed new rate of Profits Tax, a copy of which has been sent to him; and what he expects the yield of this tax to be in the present financial year.

Mr. Amory: Yes, Sir. In common with other bodies, the Scottish Rugby Union will be liable to Profits Tax at 10 per cent. on its profits. The new rate applies only to profits arising after 31st March, 1958, and the effect on the yield in the present financial year is likely to be small.

Mr. Hoy: Will the Chancellor reconsider this in the course of the Finance Bill? Associations of this kind do not distribute profits. Surely, ought not those who do such good work as these people at least to be left the little they have and not have it taxed by the Chancellor?

Mr. Amory: The changes I am proposing, of course, are based upon the recommendation of the Royal Commission, which recommended that Profits Tax should be levied on all profits of all corporations of every kind, at a uniform rate.

Mr. H. Wilson: But is not this a matter for Parliament to decide, not for the


Royal Commission? Is not there mounting evidence that this particular proposal of the Chancellor has been made in a very ill-considered way, in view of the evidence now accumulating, such as that given by the hon. Member for Huddersfield, West (Mr. Wade) during the Second Reading debate and other facts now coming forward, showing that a large number of non-profit-making organisations which would not dream of distributing dividends are being very seriously prejudiced? Will the Chancellor look at the matter again before we come to the appropriate part of the Finance Bill?

Mr. Amory: It is likely that I shall be compelled to listen to discussion on this matter again, because we shall have an opportunity of discussing these matters during the forthcoming weeks.

Mr. Gower: Is not it possible that bodies like the Royal Commission would underestimate the importance of games like Rugby? Will my right hon. Friend reconsider this, in the light of the fact that organisations of this kind usually use the money by ploughing it back for the benefit of the clubs and to reinvigorate the game, where it is most important, at club level?

Mr. Amory: I cannot express an opinion about how much importance the Royal Commission attached to the game of Rugby football, but I am perfectly prepared to listen to arguments which may be advanced on this matter, as on all relevant matters, during the course of discussions on the Finance Bill.

Mr. J. Griffiths: Will the Chancellor bear in mind that the profits of the Rugby unions are devoted to assisting small village clubs in all parts of the country and that, if these profits are denied them for that purpose, the clubs will break down and the right hon. Gentleman will have destroyed one of the most important amenities in every village in Wales and Scotland and elsewhere? Will he bear this closely in mind?

Mr. Amory: I certainly will bear that in mind, together with all other relevant points.

Customs (Forfeited Goods)

Mr. Wade: asked the Chancellor of the Exchequer what instructions he has given to Her Majesty's Customs and

Excise regarding the sale of imported goods that have been seized at prices substantially below the prices at which they could be sold if duty had been paid on them.

Mr. Amory: Goods forfeited to the Customs are sold by competitive tender at prices which normally include any import duties. If the hon. Member has any particular case in mind and will let me have details, I will look into it.

Mr. Wade: As I have an advertisement which reads:
Sensational scoop purchase from H.M. Customs and Excise. Once again outbidding rivals we have bought in for our customers the most amazing consignment of dress materials from H.M. Customs and Excise…which we now offer exclusively at fantastically low prices",
would the right hon. Gentleman be good enough to consider this matter? Would he agree that it would be unfair to honest importers to have to pay duty if Her Majesty's Customs and Excise sold at substantially lower prices, or does he contemplate scrapping import duties altogether?

Mr. Amory: No. I think that I agree with the hon. Gentleman in principle. As far as I am aware, the Customs always endeavour to get the best price obtainable from the market.

Company Statements (Newspaper Advertisements)

Mr. Frank Allaun: asked the Chancellor of the Exchequer what instructions he has given to the Commissioners of Inland Revenue regarding claims for deduction from taxable expenses of money spent on advertisements consisting of company chairmen's statements at annual meetings largely devoted to political propaganda.

Mr. Amory: None, Sir. Claims of this nature, like claims for a deduction in respect of other business expenditure, fall to be considered in the light of the rule laid down by law that outlay is deductible if, not being of a capital nature, it is incurred wholly and exclusively for the purposes of the trade.

Mr. Allaun: But is the Minister aware that in the first fortnight of this year the six big steel combines spent tens of thousands of pounds on newspaper advertisements of this kind? Have these


advertisements been allowed as trading expenses? Secondly, has other expenditure on this campaign been claimed and allowed?

Mr. Amory: The criterion which is adopted is the criterion that I have explained. Of course, it is not for me to interpret the law. That is for the Commissioners and, on appeal, for the courts.

Mr. H. Wilson: While it is not the Chancellor's function to interpret the law, is not it his function to propose appropriate changes in the law which, for example, private Members cannot propose, as they would impose a charge? Apart from the cases referred to by my hon. Friend the Member for Salford, East (Mr. Frank Allaun), has the Chancellor seen a statement by a company chairman showing that his company spent—largely financed by the Chancellor—£83 million on advertising last year, and then he spends more money to advertise that statement, to send it round the country, to M.P.s and others, and to print it in newspapers? The Chancellor is being asked to pay the greater proportion of the cost of propagating that chairman's views.

Mr. Amory: I agree with the first point that the right hon. Gentleman made; it is certainly for me to propose a change in the law if I find that one ought to be made, but in this case I have no proposal to make to change the law at present. It does not seem to me that one can object to advertisement expenditure merely because of the cost of it. It certainly ought not to be for the Revenue to lay down what should be the appropriate total expenditure of any particular firm on advertising. That is surely a matter of judgment for the firm concerned.

Hearsettes and Hearses

Mr. Rankin: asked the Chancellor of the Exchequer the criteria which distinguish a hearsette from a hearse.

Mr. Amory: A hearsette carries mourners as well as a coffin.

Mr. Rankin: Is the Chancellor aware that when the mourners attend the ceremony in the vehicle which is attached to that which carries the body a Purchase Tax of 60 per cent. is levied and if they

go separately they get a tax-free ride? Does not he think that that is an anomalous situation? For all that he gets from taxing the hearsette at 60 per cent., is it worth maintaining the tax? Will the Chancellor consider dealing with the matter during the passage of the Finance Bill?

Mr. Amory: I admit that that kind of Scottish anomaly had not occurred to me. It seems rather like the Aberdonian who complained when the cost of bus fares was put down because he did not save as much by walking.

Mr. Rankin: On a point of order. A tax is levied on the hearsette——

Mr. Speaker: That is not a point of order. The hon. Member is always trying to put points of order which are not points of order.

Dry Cargo Shipping (Balance of Payments)

Mr. Peyton: asked the Chancellor of the Exchequer the net contribution of the shipping industry to the balance of payments in each of the last two years; and how he calculates these figures.

Mr. Amory: It is estimated that the dry cargo shipping industry made net contributions to the United Kingdom's balance of payments of £280 million in 1956 and £300 million in 1957. These amounts are estimated by deducting United Kingdom ships' disbursements in overseas ports and time-charter hire payments by United Kingdom shipping companies, from income received by the industry from abroad in respect of freight, charter hire and passenger fares.

Mr. Peyton: While thanking the right hon. Gentleman for that very informative reply, may I ask him what the earnings from tanker freights were, and may I also ask him if it is a fact that those figures are different from those normally printed in the balance of payments White Papers, which take account of the disbursements of freights on United Kingdom imports and thereby give an under-estimate of the great contribution made by this industry?

Mr. Amory: Yes, Sir. The figures are different from the figures published in the annual White Paper, and if my hon. Friend likes I will write to him to explain


why that is so, but I think he understands the reason for it. I am afraid that it is not easy to give the net earnings of the tankers because, as my hon. Friend knows, they are owned mainly by the oil companies and it is extremely difficult to separate their earnings from freights from their other oil earnings; but that would amount to a substantial sum. Thirdly, I entirely agree with him that these earnings reflect the greatest credit on one of our most important national industries.

Proposed Churchill College, Cambridge

Dr. King: asked the Chancellor of the Exchequer, in view of the importance to the national economy of the provision of increased facilities for the study of science and technology, if he will make an additional grant to the University Grants Committee for the benefit of the proposed Churchill College, Cambridge; and if he will make a statement.

Mr. Amory: I understand that the University Grants Committee, which has expressed its sympathy with this proposal for a new college, has been informed that the establishment of the college will depend on the success of the public appeal for funds which has been issued by the Trustees. It is understood that Cambridge University is unlikely to make an application on this account to the University Grants Committee, at any rate during the period up to 1963, for which the sum to be available for non-recurrent grants has been provisionally determined.

Dr. King: Is the Chancellor aware that hon. Members on both sides of the House will welcome the initiative of Cambridge University both in seeking to perpetuate the name of the illustrious right hon. Gentleman the Member for Woodford (Sir W. Churchill), on the one hand, and in making a new contribution to the supply of scientists and technologists, on the other? Will he support the appeal that the university is making to industrialists and commercialists for funds, and will he also consider identifying the Government in some way with this great new historic venture?

Mr. Amory: I do not think there is much I can add to the Answer I have given the hon. Gentleman, except to say that I welcome the idea of this new

college and hope very much that the appeal will meet with a satisfactory response. It seems a constructive step forward in the extension of the facilities for university education which the Government are doing a great deal to support.

Mr. Robens: May I ask the right hon. Gentleman, in view of the importance of this new technical college, whether the Government are in any position to assist those who are trying to raise the necessary funds towards its establishment? Does he agree that it would be a great tragedy if, for the sake of a small sum of money, which the Government may or may not be able to provide, the scheme were abandoned? Is not it a good thing for this country if we can pay a tribute to one of Britain's greatest statesmen at the same time as providing what is urgently needed in this country, a new college devoted to technical education?

Mr. Amory: I could not agree more with the general tenor of the right hon. Gentleman's remarks, and in particular with the last part of his supplementary question. On the first part, he will remember the programme I announced in the House a few months ago envisaging a substantial extension in the programme of expansion for the universities at a very considerably increased cost to public funds.

University of London (Grant)

Dr. King: asked the Chancellor of the Exchequer whether, in view of the recent statement of the Principal of the University of London, he will increase the grant to this university, and, if necessary, to other universities.

Mr. Amory: No, Sir.

Dr. King: Is the Chancellor aware that the Principal of London University, Dr. Logan, has said that the 8 per cent. increase which has been made in the university grant does not in any way compensate for the rise in the cost of services since 1951, when the Estimates were prepared, and that in his annual report he has estimated that London University alone will be nearly £500,000 short of its requirements if it is to do the job it has set out to do? Will the right hon. Gentleman take grave note of the words of this eminent gentleman on this subject and consider again the question of the inadequacy of the university grant?

Mr. Amory: I am aware of the words to which the hon. Gentleman has called my attention but, with the best will in the world, there must be a limit to the resources that can be made available, even for the excellent purpose of expanding university facilities. As the hon. Gentleman instanced the pace at which we are moving, I would mention that the grants made for last year, 1957–58, were 20 per cent. higher than for the previous year, and our plans over the next four years provide for a further increase amounting to 28 per cent. for those four years.

Mr. H. Wilson: Yes, but is the right hon. Gentleman aware that there are complaints from many universities that his grants are still inadequate to meet the needs of the country, especially in science and technology? Is he aware, in particular, that some very important programmes are having to be reduced? While no one wants to interfere with academic freedom, will the right hon. Gentleman look again to see if he can give some special incentives to our universities to encourage education in science and technology over and above the existing quinquennial programmes?

Mr. Amory: While again I agree with the desires of the right hon. Gentleman on this matter, I think anybody looking at the programme of expansion we have accepted must consider that it is relatively an extremely generous allotment of the national resources.

Savings Banks Deposits

Mr. Nabarro: asked the Chancellor of the Exchequer, having regard to the increase from 600 units to 1,000 units maximum permissible holding, tenth issue National Savings Certificates, also the new Defence Bond issue from 1st May, 1958, both designed to stimulate small savings, whether he will now give similar and commensurate stimulus to savings banks deposits by increasing from £600 to £1,000 the limit on deposits which do not attract income tax upon the interest.

Mr. Amory: I do not consider this step would be justified.

Mr. Nabarro: Can the Chancellor say why not, and will he have some regard to the fact that incentives to small savers through the media respectively of National Savings Certificates, Defence

Bonds and deposits in the savings banks, ought to be approximately in line the one with the other?

Mr. Amory: Again it is a question of priorities and the limitation of the resources available at the moment. There has been no general demand for the concession which my hon. Friend has mentioned, and no reqeust for it from the National Savings Movement. At present 95 per cent. of the depositors come well within the limit of £600 now in force, but naturally it is a matter on which I shall keep my eye.

Tax Reserve Certificates (Interest)

Mr. Nabarro: asked the Chancellor of the Exchequer the present rate of interest on tax reserve certificates; at what date such rate first became operative; and what changes he now proposes in the rate.

Mr. Amory: The rate, which is at present 3¼ per cent., was last changed on 29th March. I cannot forecast any future changes.

Mr. Nabarro: Would the Chancellor go as far as to say that the rate of interest for tax reserve certificates will move up or down in accord with interest rates generally?

Mr. Amory: I am afraid I could not go quite as far as to say even that. In fact, I can go so little distance forward to meet my hon. Friend in this matter that I cannot move at all.

Capital Issues Committee (Exemption Limit)

Mr. Nabarro: asked the Chancellor of the Exchequer whether, having regard to the recent change in the Bank Rate, he will now raise the Capital Issues Committee exemption limit from £10,000 to £50,000.

Mr. Amory: The existing financial and credit restrictions are being kept under continuous review, but I have no proposals for changes to make at the present time.

Mr. Nabarro: Yes, we are all aware of that, Mr. Speaker, but is not it a fact that the unduly harsh and restrictive limit of £10,000 only was introduced in the quite exceptional circumstances of last September? As the Bank Rate


comes down—no doubt it will come down again in the next few weeks—would not it be appropriate that this limit should move back from £10,000 to £50,000, where it was prior to last September?

Mr. Amory: I think I will confine myself to saying that our present controls are extremely flexible.

Mr. H. Wilson: Will the right hon. Gentleman take it, at any rate from this side of the House, that we support him in not giving effect to his hon. Friend's proposal, and that if he were to move even a little way to meeting his hon. Friend, he would be moving not forward but backward?

Mr. Amory: I hope I can rely on the right hon. Gentleman's general support throughout this evening and tomorrow evening.

Official Report (Supply to Members)

Dr. King: asked the Secretary to the Treasury if he will now relax the instruction that the Vote Office may supply an hon. Member with only one copy of the daily Official Parliamentary Report.

The Financial Secretary to the Treasury (Mr. J. E. S. Simon): No, Sir.

Dr. King: Is the Financial Secretary aware that pettifogging restrictions of this kind, which can easily be circumvented, make our Legislature about the most parsimonious in the world in not supplying hon. Members with necessary papers?

Mr. Simon: No, Sir. I think the present arrangements for supply are reasonable and meet the general convenience of hon. Members. Not only does the Vote Office on its own initiative supply one copy of the Report daily, but it will supply an additional copy to any hon. Member who calls to draw it. In addition, six of the "tear-off" copies of certain portions of the daily Report can be obtained, besides which, as the hon. Gentleman knows, there is available the weekly HANSARD and the HANSARD bound volume for those who need that for their own purposes.

Oral Answers to Questions — LOCAL GOVERNMENT

Gas Liquor (Research)

Mrs. Slater: asked the Minister of Housing and Local Government and Minister for Welsh Affairs what further report has been made to him on research which has taken place on the problem of gas liquor being processed by sewerage works or in relation to pollution of rivers.

The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. J. R. Bevins): The Gas Council, which is conducting the research, reports to my noble Friend, the Minister of Power, and not to my right hon. Friend. I know, however, that this extremely complex and technical problem is being continuously examined and my right hon. Friend is being kept in touch with the position.

Mrs. Slater: May we expect within a very short time a report from the Minister of Power, through the Minister of Housing and Local Government, because every local authority which has this great problem is concerned in case its sewerage works are put out of action if more gas liquor has to be taken?

Mr. Bevins: I am afraid I cannot tell the hon. Lady when we are likely to have a report on this research, but it is going on, and we are always anxious to help the local authorities in the Potteries. We have, in fact, authorised new works both at Hanley and at Stoke-on-Trent.

Refuse and Sewage Sludge (Composting)

Mrs. Slater: asked the Minister of Housing and Local Government and Minister for Welsh Affairs what consultation has taken place with the agricultural industry on the question of the use of compost as a fertiliser from combining municipal refuse and sewage sludge; and if he will make a statement.

Mr. Bevins: My right hon. Friend has had no consultations with agriculture. He has however every reason to think that local authorities know of this method of dealing with these materials, and it is for each authority to decide in the first instance what method best suits its own circumstances.

Mrs. Slater: But as in a recent reply which I received from the Minister of Agriculture it was stated that this had been found to be a very valuable fertiliser, would not it be wise, when new sewerage works are being authorised, that the Minister should make a strong recommendation that this method of composting household refuse and sewage should be carried out as a long-term policy of economy and of service to the agricultural industry?

Mr. Bevins: I agree that is the view of my right hon. Friend the Minister of Agriculture that the manure which is produced is useful. The trouble is that it cannot be an economic proposition unless there is a ready local market for it because the stuff is bulky and the transport costs are high. If, however, any local authority wants to undertake work of this kind, and can show my right hon. Friend that it can pay its way, he is likely to give his consent.

Control of Advertisements (Draft Regulations)

Mr. R. F. Hesketh: asked the Minister of Housing and Local Government and Minister for Welsh Affairs whether he has yet considered all the comments and criticisms sent to him regarding the draft Regulations for the control of outdoor advertisements which he circulated last year to a number of organisations; and whether he will make a statement.

The Minister of Housing and Local Government and Minister for Welsh Affairs (Mr. Henry Brooke): I must apologise for a somewhat long Answer. I have now considered the comments of the bodies representing amentity and other interests, local authorities, the advertising industry and retail trade, to whom I circulated draft new Regulations last year. The draft Regulations, besides seeking to consolidate the existing code, proposed changes of substance on three main topics—advertisements on business premises, the advertisements permitted in areas of special control, and the machinery of control.
On the second and third of these topics, the comments reveal a sufficient measure of agreement for me to proceed with proposals which I think will command fairly general assent. Some further detailed consultations will be required, after

which I hope to lay the necessary amending Regulations.
But on the proposals about advertisements on business premises there are such strongly held opposing views that I do not think the draft Regulations will do as they stand. I propose therefore to invite certain of the organisations and interests principally concerned to send representatives to a joint meeting with me, in order that I may see if I can find a basis for agreement.

Mr. Hesketh: Is my right hon. Friend aware that his efforts to reconcile normal business interests with the desire of many of us to prevent the display of unsightly and misplaced advertisements will be very much welcomed?

Mr. Chetwynd: Does the Minister's Answer mean that there will be more or less outside advertising in the areas of special amenity?

Mr. Brooke: In the areas of special control, the existing Regulations have been too tight, and they have therefore dissuaded planning authorities from seeking to declare areas to be areas of special control. I think that there is general agreement that some loosening of the Regulations will achieve better preservation of the countryside.

Oral Answers to Questions — NORTHERN RHODESIA AND NYASALAND

British-Protected Persons (Passports)

Mrs. Castle: asked the Secretary of State for the Colonies what criteria have to be satisfied before a British-protected person in Northern Rhodesia or Nyasaland can obtain a passport.

The Under-Secretary of State for the Colonies (Mr. John Profumo): Passports are issued under the Royal Prerogative exercised by the Governor of the Territory and he may at his discretion impose conditions on the grant of a passport in the light of the circumstances of each particular application.

Mrs. Castle: As passports have recently been refused to British-protected persons who wanted to attend the Asian Socialist Conference at Bombay, and to others who wanted to attend the British Labour Party Commonwealth Conference


in this country last year, will the hon. Gentleman give an instruction that in future passports shall not be refused solely on the ground of the political views of the applicant?

Mr. Profumo: I cannot give the undertaking—[HON. MEMBERS: "Why not?"]—I am trying to tell the hon. Lady—because I do not accept the premise that passports are withheld solely on account of the political views of the applicant. What I will say is that there are particular instances in which security considerations may arise, and in those cases it must be left to the Governors' discretion.

Mr. J. Griffiths: Will the hon. Gentleman bear in mind that in all these Territories there is a conflict with the Communists for the minds of the people? Does not he agree that Africans should be encouraged to send delegates to democratic conferences, such as the one my hon. Friend mentioned? In refusing these passports, is not the Colonial Office showing political stupidity of the worst character?

Mr. Profumo: I am very sorry, but I cannot accept that either. The Colonial Office is not responsible for this, nor is my right hon. Friend displaying any stupidity. This is the responsibility of the Governors of the Territories concerned. I assure the House that the Governors use their discretion with the greatest regard to the national interest.

Mrs. Castle: Can the hon. Gentleman tell us what issue of security arose in connection with applications to visit the Labour Party Commonwealth Conference in this country last year?

Mr. Profumo: No, Sir. I did not say that issues of security arose in any particular case. What I said, and I think that it was quite clear, was that people are not refused passports merely for their political allegiances, but security does enter some cases. If the hon. Lady would like to ask about any particular issue, I shall be only too glad to try to answer her.

Oral Answers to Questions — NORTHERN RHODESIA

High Court, Lusaka (Witnesses)

Mrs. Castle: asked the Secretary of State for the Colonies whether he is yet in a position to report on his discussions

with the Governor of Northern Rhodesia over the segregation of European and African witnesses in the High Court at Lusaka.

Mr. Profumo: As my right hon. Friend informed the hon. Lady in his letter of 19th May, he has now heard from the Governor that all the four waiting rooms in the High Court building are available to witnesses without any distinction of race.

Mrs. Castle: While asking the hon. Gentleman to thank the Colonial Secretary for the steps he has taken to remedy the situation, which has been remedied solely as a result of my putting down this Question, as the Colonial Secretary's letter to me explicitly explained and which I am sure the hon. Gentleman will agree to be the case, may I ask him whether he considers that this is the sort of situation which the Race Relations Committee in Lusaka ought to be preventing? Will he arrange that in future plans of public buildings should be submitted to the Race Relations Committee in order to prevent these unfortunate incidents of segregation of people?

Mr. Profumo: No, Sir. There was no discrimination about this. My right hon. Friend's letter was written to the hon. Lady to spare her the embarrassment of asking a socially difficult question about lavatories, and if the hon. Lady really believes that there was discrimination and that this was not merely a human problem, she has misunderstood my right hon. Friend's letter.

Oral Answers to Questions — BRITISH SOMALILAND

Development

Mr. Brockway: asked the Secretary of State for the Colonies what action is being taken to make the Legislative Council in British Somaliland more representative, and to extend general development and education in the territory.

Mr. Profumo: I would refer the hon. Member to the reply which my right hon. Friend gave to him on 1st April.

Mr. Brockway: Is the hon. Gentleman aware that that reply did not cover all the points which are raised in this Question? As Italian Somaliland is to have independence in 1960, and in view


of the danger in that situation with the absence of political advance in British Somaliland and in its social and economic conditions, which may create a very difficult situation, will the right hon. Gentleman give the attention of his Department to these necessary developments?

Mr. Profumo: It would be better to await the Report of the Constitutional Commission.

Oral Answers to Questions — KENYA

Detainees (Release)

Mrs. Castle: asked the Secretary of State for the Colonies what written commitments have to be made by detainees in Kenya camps before they are considered eligible for release.

Mr. Profumo: None, Sir.

Mrs. Castle: Is not it the case that at Nyeri in March this year a detainee was asked to sign a document in which, in order to get his release, he had to pledge that:
I will never be an agitator.
I will never enter into the organisation of the agitators.
I agree to the land consolidation programme.
I shall never ask the Government to pay back any loss incurred while I was a detainee.
Is not it clear that the right hon. Gentleman has been misled by the Governor in stating that there are no commitments?

Mr. Profumo: My right hon. Friend has not been misled. Release does not depend on confession, either verbal or written, but wholly on the Governor's judgment of whether, for the purpose of maintaining law and order, which the hon. Lady realises as well as anyone else is still in danger in this Territory, it is still necessary to exercise control over an individual.

Oral Answers to Questions — TANGANYIKA

Cattle Thefts

Mr. Wall: asked the Secretary of State for the Colonies what steps are being taken by the Government of Tanganyika to check the increasing number of thefts of European-owned cattle.

Mr. Profumo: I would refer my hon. Friend to the answer my right hon. Friend

gave to my hon. Friend the Member for Crosby (Mr. Page) on 15th April. The Tanganyika Government has this difficult and long-standing problem much in mind; measures at present under consideration include the possibility of legislation dealing specifically with stock thefts.

Mr. Wall: While thanking my hon. Friend for that reply, may I ask whether he agrees that stock-breeding is extremely important to the agricultural people of Tanganyika? Does not he agree that attacks by armed Africans appear to be increasing; and, as the Europeans concerned are taxpayers, are not they entitled to adequate protection?

Mr. Profumo: I agree generally, but some of the recent reports have been very much exaggerated.

Legislature (Upper House)

Mr. Wall: asked the Secretary of State for the Colonies whether he will give consideration to the establishment of an upper house of the Tanganyika Legislature.

Mr. Profumo: The Governor of Tanganyika has recently stated that in his view there would be considerable merit in establishing some form of State Council in Tanganyika in which the wisdom and experience of the traditional authorities would find expression and where others, who might be discouraged by inclination or because of other commitments from serving in the Legislative Council, would be able to make their full contribution to the solution of the Territory's problems. The Tanganyika Government are carrying out a detailed examination of the question and will have some points to put to the next Chiefs Convention in June with a view to setting in train certain joint studies which would form the ground work for later consideration of this matter by the Post Elections Committee. It is too early to say how closely such a body, if created, would approximate to an upper house.

Mr. Callaghan: If this matter is to be considered and if it is too early to give a final answer, will the Under-Secretary of State give an assurance that the purposes of such a chamber would not be to frustrate the will of the Legislative Council, for in those circumstances it should not be persisted in?

Mr. Profumo: I do not think that the Post Elections Committee—created as the hon. Gentleman knows it will be—would allow the development of any such organisation.

Mr. Wall: Would my hon. Friend agree that the provision of a second chamber would provide a democratic method for the chiefs to express their views, and have not these men a considerable part to play in the political future of Tanganyika?

Mr. Profumo: I think that they have.

Mr. Callaghan: In that case, would not it be better to allow them to take their place in the Legislative Council?

Mr. Profumo: I think that we had better wait to see how this develops.

Oral Answers to Questions — THE WEST INDIES

Federal Capital

Mr. Chetwynd: asked the Secretary of State for the Colonies whether he will make a statement on the decision not to press the United States of America to give up Chaguaramas for the site of the capital of the West Indies Federation.

Mr. Leather: asked the Secretary of State for the Colonies whether he will make a statement on the report of the expert committee on the site for the capital of the West Indies.

Mr. Profumo: Her Majesty's Government would certainly have invited the United States Government voluntarily to surrender their rights at Chaguaramas as an act of generosity if the Joint Commission had reported that all or part of the base could be given up without adversely affecting defence, or could be replaced at any reasonable cost. But in view of its report, and bearing in mind the overriding importance of the base to the defence of the Western Hemisphere, which is also of vital concern to the West Indies, Her Majesty's Government could not reasonably ask the United States Government either to relinquish part of the base or to meet the very considerable cost of moving the whole of it to a less satisfactory site.
Her Majesty's Government realise that the Commission's findings will cause disappointment, but they hope that the

Governments of the West Indies and of Trinidad will recognise that they make Her Majesty's Government's attitude inevitable.

Mr. Chetwynd: Is not this decision a very serious set-back to the new Federation? Is it too late, even at this stage, to press the United States to give up at least part of this area for a capital? It seemed to me, when I visited the area, that there was plenty of room for that without infringing on the defence needs. If that is out of the question, can the Minister say what is the next step in finding a capital? Is the whole thing in the melting pot once again?

Mr. Profumo: The hon. Member has asked a number of questions. Of course, it is a serious step, but this was a unanimous report of representatives of all the Governments concerned and I must disagree with the hon. Gentleman that part of Chaguaramas could be given up. I have just come back from there, and speaking as a layman—both the hon. Gentleman and myself are laymen in this connection—I should be at variance with him, and I think that my view would command as much credence there as would his view. Now that the Government of the Federation has been set up, it will be for that body to take such decisions. Perhaps I should add that Her Majesty's Government will always stand ready to give such advice as may be sought from them.

Mr. Leather: Is my hon. Friend aware that, like him, I know Chaguaramas very well and I find the Joint Commission's report completely astonishing, particularly in view of the neglect and decayed condition into which the United States naval authorities have allowed the district to fall? Is he aware that one finds the statement of the Colonial Office very disturbing because it certainly can be interpreted as slamming the door in the face of the West Indian Government? Will he give us every assurance that the Colonial Office will do all possible to find a solution agreeable to the West Indian Government?

Mr. Profumo: I am sorry that my hon. Friend does not agree with me, but at least I have agreeing with me a body of technical information which is very large


and entirely unanimous. As to the statement made by Her Majesty's Government, the Governments of the West Indies and Trinidad were reluctant, for reasons which Her Majesty's Government fully recognise, to issue any agreed statement of conclusions on the publication of the report. Had we waited to make plain the attitude of Her Majesty's Government, perhaps until after the United States had made a statement, we might have been criticised for making our statement under pressure from the United States, and that was not the case at all. I believe that it is for the Federal Government to try to find an alternative solution, and I am sure that it would not be for my right hon. Friend to seek to impose a solution on any of the parties.

Mr. Callaghan: Whatever may be the technical considerations, is not the overwhelming political consideration the setting up of a new Federation which desires a capital in this place? Does the hon. Gentleman really mean that this site is so vital to the United States; and, if that is so, may I ask why there has not been further development of it during the last few years? Is the Under-Secretary aware that the United States is spending something like £1,500 million a year overseas, and is he really saying that the cost of establishing a new site would be so great that the United States is not prepared to do that, even in view of the political implications?

Mr. Profumo: I am anxious that this matter shall be understood by hon. Members on both sides of the House. First, there is a wide difference of opinion, even among people in the West Indies, about whether Chaguaramas is the right site for a capital. There is no agreed conclusion on that. There is a wide measure of disagreement—perhaps the hon. Gentleman had better read the report for himself.
It is not a question of what it will cost to move this enormous base to a less good site but the fact that it would take from between five and ten years for the United States to be able to establish a military shield once again in front of the West Indies for the protection of the Western nations. In view of those things, and if he will read the report, I believe that the hon. Member will consider it better to desist from further inflammatory statements.

Mr. J. Griffiths: We regret this decision but if it is to stand, and as any other site for the capital is almost certain to cost a great deal more money, may I ask whether Her Majesty's Government are prepared to accept the financial responsibility?

Mr. Profumo: I do not accept the contention of the right hon. Gentleman.

Mr. Callaghan: In view of the very unsatisfactory nature of the hon. Gentleman's reply, and as, thanks to his courtesy I have received from the Colonial Office a copy of the Report, I beg to give notice that, having read the Report, I shall endeavour to raise this matter on the Adjournment.

Oral Answers to Questions — MINISTRY OF WORKS

London Wall

Mr. E. Fletcher: asked the Minister of Works what steps he has taken to prevent the threatened destruction of an important section of the Roman Wall of London.

The Minister of Works (Mr. Hugh Molson): I assume that the hon. Member is referring to a section of the London Wall between Cripplegate and Falcon Square. Three bastions consisting largely of Roman work are scheduled under the Ancient Monuments Acts and notice is accordingly required of any intention to carry out works affecting them.
Adjoining the southernmost of these bastions and to the south of it a short stretch of wall was also scheduled. Although there may be Roman remains below ground, this consisted mainly of the upper parts of the mediæval city wall; the lower parts had been cut away and modern brickwork substituted. This piece of wall and its junction with bastion 14 were recently demolished inadvertently in connection with the construction of Route 11 and there was minor damage to the bastion itself. My inquiries into the circumstances of this incident are not yet complete.

Mr. Fletcher: I appreciate that as soon as this regrettable incident came to the notice of the Minister and the City engineer, steps were taken to prevent further damage. Will the hon. Gentleman bear in mind the constant danger of destruction? Will he also bear in mind that


the real solution is to proceed immediately with the plan, already agreed in principle, for the creation of a sunken garden to bring the wall down to the level of the inner ditch?

Mr. Molson: I am examining means of preventing an incident of this kind from occurring again. The City of London has been most co-operative in this matter and regrets what has happened as much as I do. I will consider further what the hon. Gentleman has said.

Sir Walter Raleigh (Statue)

Sir H. Kerr: asked the Minister of Works whether he has any further statement to make about the site for the proposed statue of Sir Walter Raleigh.

Mr. Molson: As I stated on 4th March, I have undertaken to find a suitable site in London for a statue of Sir Walter Raleigh by Mr. William McMillan, R.A., which will be erected at the cost of a number of generous individuals and companies who wish to commemorate the early links between the British Commonwealth and the United States of America.
In view of the strong desire of the Royal Fine Art Commission and of the Trustees of the National Gallery that the statue of James II by Grinling Gibbons should not now be removed from its present site, I have reconsidered the matter. I have now decided that the proposed statue of Sir Walter Raleigh should be placed in the garden to be laid out on the Whitehall frontage of the Government offices now being erected in Whitehall Gardens. The R.F.A.C. has thanked me for accepting its advice and has expressed its approval of the new site.

Oral Answers to Questions — SCOTLAND

Loch Ness

Mr. Hector Hughes: asked the Secretary of State for Scotland if his attention has been drawn to the discovery, at or near Loch Ness, of a giant-sized webbed claw, like that of a pre-historic monster; if he is aware that an investigation is to be made on the spot into the allegations as to the existence in Loch Ness of a monster; what assistance his Department will give to these investigations, by grant or otherwise; and if he will make a statement.

The Secretary of State for Scotland (Mr. John Maclay): I have seen Press photographs of this claw, but its value as evidence can only be assessed by scientific examination. I understand that, from the photographs, the object appears to resemble an alligator's foot—possibly stuffed. I have not been asked to assist any investigation of Loch Ness.

Mr. Hughes: Does not the Secretary of State realise that the important contribution which Loch Ness may make to scientific problems has been recognised by the B.B.C., which, at great expense, undertook an expedition there last Thursday, by a distinguished author who wrote a book on the subject and by the principal Scottish newspapers? Does not he think that it is stultifying in this scientific age not to take serious notice of the important discoveries which may be made there and for which he may have the credit?

Mr. Maclay: I confess that I am still unable to find that I have any clear-cut responsibility in this matter. Speaking as Fisheries Minister, there is no evidence that the fisheries in Loch Ness need protection, either from the alleged monster or from the investigators, or vice versa.

Sir J. Hutchison: Will not my right hon. Friend agree that the story of the Loch Ness monster, apart from any scientific value that it may have, is a source of considerable tourist interest to Scotland, and will he please do nothing to explode it?

Sea Wall, Eastfield

Mr. Willis: asked the Secretary of State for Scotland what representations he has received concerning tide and storm damage at Eastfield, Edinburgh; and what action he proposes to take in this matter.

Mr. Maclay: I have received a letter from sixteen owner-occupiers of property at Eastfield about the need for repairing the sea wall there, and I have asked Edinburgh Corporation, as coast protection authority, for its comments on it.

Mr. Willis: Is the right hon. Gentleman aware that the property of a number of people is very seriously endangered through no fault of their own? They have, in fact, done all that they can to maintain the sea wall there. Will he


see that something is done about this matter which has been outstanding for a considerable time?

Mr. Maclay: I think that I should await the comments of Edinburgh Corporation before making any further statement.

Aberdeen (Secretary of State's Visit)

Mr. Hector Hughes: asked the Secretary of State for Scotland if he will make a statement on the results of his visit to the City of Aberdeen on and about 16th May, with particular reference to the fishing industry, the need for more light industries and the unemployment problems.

Mr. Maclay: My visit gave me a welcome opportunity to see at first hand various activities connected with the Aberdeen fishing industry, including the valuable research work going on at the Marine Laboratory and the Torry Reseach Station. As to the attraction of light industries to the area, and its unemployment problems generally, I am keeping in close touch with my right hon. Friends the President of the Board of Trade and the Minister of Labour and National Service.

Mr. Hughes: Is the Secretary of State aware that I shall have to strike a somewhat more critical note in this supplementary Question, as it does not affect the monster? Is it a fact that he has spent only a couple of hours in Aberdeen and is not it a pity that he should go so far to see so little and do so little? Will he pay more attention to the needs and the problems of Aberdeen, and will he arrange for the monster's claw to be put in the Library of this House?

Mr. Maclay: I spent a very valuable and interesting day, arriving there about 11 o'clock, as my train was late, and leaving about 6 o'clock in the evening, having seen a lot.

Oral Answers to Questions — TRADE AND COMMERCE

Cinematograph Films (Levy)

Mr. Rankin: asked the President of the Board of Trade on what estimate of cinema attendances he has calculated the yield for the films levy for the years

ending October, 1958, and 1959, respectively.

The Parliamentary Secretary to the Board of Trade (Mr. F. J. Erroll): The yield of the levy depends on a number of factors in addition to the level of cinema attendances. The new levy rate has been fixed on the assumption that attendances will continue to fall, but not so sharply as during recent months when they have been about 20 per cent. lower than a year previously.

Mr. Rankin: Does the Parliamentary Secretary realise that it is not in the best interest of British film production that its income, to a large extent, should be tied to such an unstable source as cinema admissions, and would not he consider some other method of subsidising production because, after all, this method is just a subsidy?

Mr. Erroll: I cannot consider an alternative method at present.

Butter Imports

Mr. Braine: asked the President of the Board of Trade if he is yet in a position to make a decision in regard to the New Zealand Government's request for action to be taken under the Anti-Dumping Act.

Mr. Hurd: asked the President of the Board of Trade to what extent his inquiries into the complaint made by New Zealand and the English Milk Marketing Board on the dumping of foreign butter here have revealed the existence of grounds for action under the Customs Duties (Dumping and Subsidies) Act, 1957.

Mr. Jay: asked the President of the Board of Trade if he will now state what action the Government proposes to take to meet complaints about dumping of butter in the United Kingdom.

Sir F. Medlicott: asked the President of the Board of Trade if he will make a statement on the discussions with the Government of New Zealand concerning butter imports into the United Kingdom, indicating whether an agreement has been arrived at or is imminent.

Mr. Lipton: asked the President of of the Board of Trade what agreement has been made with the New Zealand Government about butter imports.

The President of the Board of Trade (Sir David Eccles): The consideration of the applications made under the Customs Duties (Dumping and Subsidies) Act, 1957 so far as they relate to Finland, Sweden and the Irish Republic has been completed. Her Majesty's Government are satisfied that exports of butter by these three countries have been promoted by subsidies. We are still considering the application relating to Argentina.
The Government have decided that the subsidised imports have caused material injury to the New Zealand dairy industry. We have not found any such material injury to the dairy industry in this country.
The Government consider it is in the national interest to take action on the New Zealand application. They have therefore asked the Governments of Sweden and Finland, which are traditional suppliers of butter, either to eliminate the practices complained of, or to keep their exports within agreed limits which would begin to operate as from today. If they are unwilling to take either course the Government will impose countervailing duties.
As regards the Republic of Ireland, also a traditional supplier of butter, we have requested the Government in accordance with the provisions of the Trade Agreement of 1938 to enter into consultations on a similar basis.
I will make a further statement to the House as soon as we know what the three Governments concerned proposed to do.
Since the New Zealand application was made, imports of butter from Poland have increased sharply. It has therefore been decided independently of the action to be taken in the case of Finland, Sweden and the Irish Republic, that imports of Polish butter should also be limited. In addition the open licence for imports of butter from Eastern Europe generally is being withdrawn.
We estimate that over the course of a year our supplies of butter from the countries I have mentioned will be reduced by an amount equal to some 10 per cent. of our total supplies in 1957, that is by about 40,000 tons. A reduction of this order will strengthen the market and be of substantial assistance to New Zealand.

Mr. Braine: Will my right hon. Friend explain why, with the anti-dumping legislation on the Statute Book, it was really necessary for no action to be taken until New Zealand made this complaint? Does not this seem a little odd in view of the natural ties between our two countries and the fact that we have always had a continuous and regular supply of good quality butter from New Zealand? Do not family loyalties count for anything these days?

Sir D. Eccles: That is the manner in which the Act is operated, and I explained it to the New Zealanders a year or two ago.

Mr. Jay: As the President admits that New Zealand has been injured, will he say whether the British Government offered New Zealand a direct British Government contract for the purchase of this butter at a reasonable price?

Sir D. Eccles: No, Sir.

Mr. Hurd: While welcoming the Government's decision to take prompt action now, may I ask my right hon. Friend if he will keep in mind the very general approval that there would be for using the Act, which this House passed last year, to ensure that our good friends the New Zealanders, our own farmers, and the Danes, who are very good customers of ours, do get a fair run in the British market? Will he do that if these quota arrangements do not prove satisfactory?

Sir D. Eccles: Yes, Sir; I will. We have given these Governments a month in which to make up their minds. If they do not wish to accept the quota limits we will put on the duties.

Mr. H. Morrison: Can the right hon. Gentleman give some indication of how far this decision will result in a material betterment of our butter purchases from New Zealand and how far it will meet the requirements and wishes of the Governmen of New Zealand? Can he say why we should not make a direct bulk purchase agreement with Now Zealand, which is an important and very loyal part of the Commonwealth, so that that country will know where it is and we shall know where we are, too.

Sir D. Eccles: The reply to the first point is that there is no doubt that the price of butter will be strengthened. It


is hard to say by how much. It is difficult to say what will happen, because competition with margarine is very keen. In recent weeks, butter, at its low price, has been gaining substantially on margarine in the market. The price will be strengthened. [An HON. MEMBER: "What is that?"] A stronger price means a higher price. We do not know what will happen. On the second point which the right hon. Member for Lewisham, South (Mr. H. Morrison) asked me, if we were to make a bulk contract we should either have to put all imports under control, when the whole trade would become controlled by the Government, or we should have to be prepared to put upon the Exchequer any loss made on the New Zealand contract. Neither of those courses appears to be so efficacious as reducing the supplies of subsidised butter, as we are doing.

Mr. Turton: Will not my right hon. Friend take the opportunity to reconsider the procedures in regard to the dumping of imports on the British market? During the weekend my right hon. Friend took very speedy action against the threat of Belgian imports of butter, but in the case of these other countries there has already been a long delay and considerable damage to New Zealand trade.

Sir D. Eccles: Belgium never had sent us butter and therefore it was a very simple operation to withdraw the open general licence. In the case of traditional suppliers we are bound, by

the Act, to determine whether or not the commodity is subsidised and whether it is doing material damage. We proceeded with this inquiry as quickly as we could.

Mr. Bottomley: Will the President of the Board of Trade take the opportunity to tell the Prime Minister that it does not encourage good Commonwealth relationships to keep the Deputy Prime Minister of New Zealand here for five weeks or more and then to send him home dissatisfied?

Sir D. Eccles: The Deputy Prime Minister, who has been kept in touch with all these talks, knows the extreme difficulty we have had in reaching a decision so soon.

Mr. Jay: Would New Zealand have welcomed a bulk-purchase contract with this country?

Sir D. Eccles: No, because they know we were not prepared to make it.

BUSINESS OF THE HOUSE

The Secretary of State for the Home Department and Lord Privy Seal (Mr. R. A. Butler): The subject for debate on Thursday of this week in Committee of Supply will be the aircraft industry.
I can now confirm the length of the Whitsun Recess. We hope to adjourn on Friday of this week until Tuesday, 10th June.

Orders of the Day — FINANCE BILL

Considered in Committee [Progress 19th May.]

[Sir CHARLES MACANDREW in the Chair]

Schedule 1.—(SUBSTANTIVE CHANGES IN PURCHASE TAX RATES, ETC.)

3.34 p.m.

Mr. Gerald Nabarro: I beg to move, in page 29, line 16, after "etc.)", to insert:
or Group 33 (drugs and medicines manufactured or prepared except toilet preparations)".
The purpose of this Amendment is to reduce the rate of Purchase Tax from 30 per cent. to 15 per cent. on certain proprietary drugs and medicines. It has stood at 30 per cent. for several years and was originally part of the 33⅓ per cent. Schedule. There are several reasons why this matter merits close consideration.
Only a small part of the drugs and medicines which carry Purchase Tax fall within the ambit of "drugs and medicines". Therefore, the amount of Purchase Tax payable on that small part is not a tremendous consideration. So far as I can tell, by a figure given to me by the Minister of Health only a few weeks ago, only about £37 million worth of proprietary drugs and medicines attracts Purchase Tax. The figure is based upon the wholesale value. The amount of tax at 30 per cent. raises about £11 million, out of which about £1½ million is in respect of proprietary drugs and medicines prescribed within the National Health Service, and, therefore, subject to what is generally known as the circular transaction. This means that money is voted for drugs and medicines and such Purchase Tax as is then paid to the supplying wholesalers finds its way back, as a circular transaction, to the Treasury.
The Conservative Party has from the outset been strongly opposed to Purchase Tax on drugs and medicines. I have looked up the debate which took place on the Finance Bill, 1948. I find that Mr. Osbert Peake, who was then the hon. Member for Leeds, North, and is now Lord Ingleby, moved an Amendment from the Opposition benches, the purpose

of which was to abolish altogether Purchase Tax on drugs and medicines. He said:
What we propose in our Amendment, and in the remaining Amendments of the series, is that all drugs and medicines of whatever character should be exempted from Purchase Tax.
He concluded by saying:
We on these benches have been driven by what the Chancellor of the Exchequer has done to take up, without any form of qualification, the stand that the time has now come when all drugs and medicines should be freed of Purchase Tax altogether."—[OFFICIAL REPORT, 2nd June, 1948; Vol. 451, c. 1032–7.]
A large number of hon. Members, some of whom are still Members of the House of Commons, supported Mr. Peake on that occasion.
The general case against Purchase Tax on drugs and medicines may be stated very simply. Many of those which attract Purchase Tax are generally known as household remedies. They are very well known proprietary brands readily available to the general public, and are found in nearly every household medicine chest. These remedies are generally asked for by their brand or trade name. The purchaser relies upon the high standard of quality which is generally associated with the reputations of the manufacturers concerned.
I claim that drugs and medicines are not a suitable subject for Purchase Tax because they are essential commodities for the general public and for the household, and that they may reasonably be compared with foodstuffs. To tax drugs and medicines of a proprietary character is to place a direct tax upon the promotion of good health or the avoidance of illness.
The position has been made very complicated indeed by the fact that a large number of proprietary drugs and medicines are exempt altogether from Purchase Tax. It has been found somewhat difficult to understand why certain proprietary drugs and medicines which have been put into dispensing packs under the National Health Service are free of Purchase Tax, yet when those same drugs and medicines are sold as proprietary articles, not in dispensing packs but over the chemist's counter, they attract Purchase Tax.
In that particular case, the matter really resolves itself into a consideration as to the method of supplying the patient. If he is supplied through the medium of


a dispensing pack, the article carries no Purchase Tax, but, if the article is supplied over the chemist's counter, Purchase Tax is attracted. I suggest to the Financial Secretary that that is an unsatisfactory state of affairs.
I have endeavoured to do some research on this matter, which is extremely complicated. I find that these anomalies and difficulties originally arose from the Purchase Tax (No. 5) Order, which exempted certain drugs, in the main because they were regarded as essential and/or costly. Some of them were exempt when supplied without any admixture, whereas others, under Head III of the Schedule to the Order to which I have referred, were exempt separately, or combined with one another.
Official unbranded drugs and preparations, that is to say, drugs and medicines conforming to the provisions of Part 2 of the Eighth Schedule to the Finance Act, 1948, were exempt, but these drugs and medicines were required to consist solely of one or more substance described in the British Pharmacopœia, British Pharmaceutical Code or in the Formulary prescribed by the Ministry of Health for the purposes of the National Health Service. I think that hon. Members in all parts of the Committee will see how extraordinarily difficult it is to interpret the position in regard to Purchase Tax of any proprietary drug or medicine. Dispensing packs were specifically exempted and described as special packs of drugs or medicines for dispensing purposes, but the same product in a smaller or different size for sale to the public separately, and not in a pack, attracted the tax.
The time has now come to consider abolishing altogether—or at least going half-way this year, which is what my Amendment proposes—this unsatisfactory state of affairs and a Purchase Tax application which is wholly inimical to the interests of the Government and to the interests of the public at large. I am not a doctor, a druggist, pharmacist, or dispenser and I cannot speak with professional knowledge on what is a difficult matter, but I appeal to my right hon. Friend when I say that self-medication in the matter of minor ailments is something which every right hon. and hon. Member in all parts of the Committee ought to support. If everyone who

suffered a minor cut or burn, or a minor disability or ailment, resorted at once to the National Health Service, I think that a state of affairs would be created in which doctors' surgeries would be unnecessarily cluttered up. Therefore, to put a Purchase Tax on those very articles which are best suited to self-medication, and which should be found in the first-aid box of every household and every factory, is inimical to our desires to maintain a healthy, efficient and economic National Health Service.
I want my hon. and learned Friend the Financial Secretary particularly to reply to this point. I dislike circular transactions—I had occasion to refer to one recently when talking about smokeless appliances under the Clean Air Act—whereby the Treasury, by subvention, pays funds to a local authority or, in the case of the National Health Service, for the provision of equipment which attracts Purchase Tax. The Purchase Tax is paid to the wholesaler and, after describing a circumference, it finds its way back to the Treasury to offset the original amount paid in respect of that original Purchase Tax item. It must be a very inefficient system, whether it is part of our arrangements for a clean air policy or part of the arrangements for the expenditure which the House votes for the National Health Service.
I commend to my right hon. Friend, as always in controversial matters of this kind, the Division List of the House. That on 2nd June, 1948 makes instructive reading. My right hon. Friend the present Chancellor of the Exchequer voted for the abolition of Purchase Tax on drugs and medicines. He was supported by the former Chancellor, my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft). [HON. MEMBERS: "Where is he?"] He will be here any moment now. He was supported by my right hon. Friend the Member for Flint, West (Mr. Birch). He was supported by the Home Secretary. He was supported by my right hon. Friend the Member for Woodford (Sir W. Churchill). He was supported by my right hon. Friend the present President of the Board of Trade. He was supported by my right hon. Friend the present Minister of Agriculture. He was supported by my right hon. Friend the present Secretary of State for the Colonies. He was supported by my


right hon. Friend the present Secretary of State for Scotland. He was supported by my right hon. and learned Friend the present Foreign Secretary.

Mr. Harold Wilson: On a point of order, Sir Charles. Would not this possibly come under the heading of tedious repetition? Would it not be possible for the hon. Member for Kidderminster (Mr. Nabarro) to read a list of these rather inconsistent hon. Members, instead of introducing each of them with the phrase, "He was supported by my right hon. Friend"?

The Chairman: It is not out of order, but it is rather boring.

3.45 p.m.

Mr. Nabarro: Opinions may well differ on that; I have never known alliteration wasted on the House of Commons. The present Prime Minister similarly supported the abolition, as did the present Attorney-General, the present Minister of Works, the Secretary of State for Air, and many others.

Mr. Douglas Jay: Will the hon. Member for Kidderminster (Mr. Nabarro) give us an assurance that he will vote for his own Amendment this afternoon?

Mr. Nabarro: It depends what assurances are forthcoming.
When the right hon. Member for Battersea, North (Mr. Jay) was in office, he listened to very many pleas on this difficult and controversial matter and, as Financial Secretary to the Treasury, he invariably resisted them. One of my purposes in moving this Amendment is to find whether the views of Her Majesty's Government have in any way changed as a result of the admirable recommendations made by the Guillebaud Committee on the National Health Service, two or three years ago.
I have demonstrated to my right hon. Friend that overwhelmingly the Conservative Party, on 2nd June, 1948, supported the view that Purchase Tax should not be placed on any proprietary drugs and medicines of any description. If their views have changed in the last decade, we should be told why. It is my view that a step in the right direction could be taken by halving the rate of Purchase Tax. Under the formula I enunciated yesterday, I suggest that if we must have

a Purchase Tax at all it should be at a flat, non-discriminatory, uniform rate of 15 per cent. It is my purpose today to reduce to 15 per cent. the tax on drugs and medicines, which are at present taxed at 30 per cent.

Mr. Elwyn Jones: Will the hon. Member tell us what the Guillebaud Committee recommended on this issue, as some of us are not aware that this matter came within its purview?

Mr. Nabarro: I repeat my words, subject to confirming them when I read them in HANSARD. I was anxious to ascertain whether my right hon. Friend had in any way changed his views about the imposition of Purchase Tax on proprietary drugs and medicines as a result of the admirable recommendations made by the Guillebaud Committee. [HON. MEMBERS: "What were they?"] It would be out of order to say exactly what they were and I would never be guilty of incurring your displeasure in that way, Sir Charles. What we ought to know is whether my right hon. Friend has changed his views as a result of the admirable recommendations of the Guillebaud Committee.

Mr. H. Wilson: On a point of order, Sir Charles. I think there is a little confusion in the Committee about our procedure at this point. We understood, perhaps wrongly, that while this was the only Amendment in this group to be moved there would be discussed with it the Amendment immediately following, in the name of my hon. Friend the Member for Bristol, North-East (Mr. Coldrick) and some other of my hon. Friends, in page 29, line 16, after "etc.)", to insert
Group 34 (b)(stationery and office requisites)".
We understood that the Amendment in the name of the hon. Member for Kidderminster was the only one which would be called, but that we could widen the discussion to cover stationery and office requisites, which form a subject far apart from the subject of this Amendment, to save the time of the Committee.

The Chairman: If the Committee so wishes, we can deal with stationery at the same time.

The Financial Secretary to the Treasury (Mr. J. E. S. Simon): I understand that that Amendment is not selected, Sir Charles.

The Chairman: I understood that, too, but apparently I said something different at a conference with the Opposition, and perhaps if I allow a discussion to take place on that Amendment it will please everybody.

Dr. Barnett Stross: I should like to limit my remarks to the matter of drugs and medicines. I wish I could feel that the problem was as simple of solution as does the hon. Member for Kidderminster (Mr. Nabarro), but since 1940, when the tax was first imposed, it appears to have become a more complicated question each and every year. From time to time action has been taken by the Government, either through the Ministry of Health or the Treasury, which has resulted in a situation such as that appertaining today, when it is very difficult indeed to find one's way through the maze of problems associated with what the hon. Member for Kidderminster has now raised as if it was a very simple matter.
The hon. Member made it clear that he feels that there should be no tax at all on drugs, because such a tax is a tax on health and is a bar between the citizen and his right to self-medication. As he rightly said, so many prescriptions bear Purchase Tax today that the situation becomes confusing. Sometimes, the Minister of Health pays the tax, which is then returned to the Treasury, and it must be an unnecessarily costly business, as some of us would argue, that it should be imposed, on the one hand, and taken off, on the other. How expensive it is, I do not know, and what percentage of overhead charges is involved I cannot say, but it must be fairly considerable.
Further, this matter was debated before 1948. I think that the hon. Member for Putney (Sir H. Linstead) raised it in 1947, when he did not press an Amendment to a Division, but I remember that he discussed the anomalies that existed at that time. When Mr. Osbert Peake was speaking, in 1948, he gave one or two illustrations which were interesting. He pointed out that there was a tax on an effervescent aperient known as "Eno's Fruit Salts," but that on the ordinary effervescent sodium citro-tartrate, which is exactly the same material, there was no tax at all. All the examples of this type are interesting, and one could give many more, but there are some things,

in my view, that certainly do merit taxation.
For example, if one can prescribe phenobarbitone, which is not taxed, I must have some sympathy with the Treasury if it feels that it must impose a tax on a substance which is exactly the same but which bears another name. It differs only because it bears another name, and if the Treasury wish to tax it—and, incidentally, one has to pay for it three or four times the price of phenobarbitone, which is untaxed—I find it difficult to deny the Treasury the right to say that it should be taxed.
If the Treasury were to tax petroleum jelly, which is really vaseline, I would be against it, but if it was proposed to tax vaseline, which is petroleum jelly under a proprietary name, very much more costly, but differing in no way whatever from the original substance, I should find it difficult to deny the Treasury the right to tax it. I wish it were all as simple as this.
As far as I know, there is no tax on aspirin prescribed by a doctor, but I am sure that if a doctor were to prescribe a form of aspirin sold under another name, he would merit some rebuke from those responsible for payment, and there would be a tax upon it. I have every sympathy with the Treasury in saying, "We are considering the money we must find. If we are to tax drugs at all let us take substances of this kind which are not taxed when sold by their normal names, but which are taxed when sold much more expensively and carrying another name."
It would, therefore, seem that if there is to be a tax at all it is reasonable to tax goods which are openly advertised to the public. The hon. Member for Kidderminster was quite right when he pointed out that a number of articles, which are normal drugs and medicines normally prescribed by the medical profession, are never advertised to the public but are also taxed. An attempt has been made to avoid this as far as possible by the work of the Cohen Committee. I think I am right in saying that that Committee divided drugs into different categories, and suggested that the first two categories should not bear Purchase Tax. That is the impression I have, but if I am wrong perhaps the Financial Secretary will advise me.
It seems that this was a method, or at least an attempt, to bring some order into this confusion, but I would suggest that it inevitably in itself creates another form of confusion. It means that these preparations which are not in categories 1 and 2 carry a sort of stigma because they are not free of Purchase Tax. At least, that is what some people think. By the way, I should tell the Committee that I have a personal interest in the matter, because I have an interest in a firm of manufacturers of drugs and medicines. This does not make me any more knowledgeable than otherwise I would be, or any more knowledgeable than anyone else in the Committee on this matter; but is customary to declare an interest, and I suppose that I do not know any the less for having this particular interest.
The situation, therefore, is that the drugs in the categories not exempt from Purchase Tax have, rightly or wrongly, may be considered to be inferior, because they have not received the stamp or hallmark of their quality. This is probably a wrong impression, but it does exist. When one looks at what has happened in extenso, it is very easy to find some very gross anomalies. I will not repeat what has already been said, how Group 33 is subdivided in Notice 78B, which is relevant to our discussion, and there are some very interesting things in it.
First, amongst things chargeable, I notice worm cakes. On the opposite side of the page, as non-chargeable, we see cocoa powder and chocolate. The cocoa powder, the chocolate, and the drug that destroys the worms are not, by themselves, chargeable, but if the drug is covered with chocolate or cocoa powder it becomes a worm cake and becomes chargeable——

4.0 p.m.

Mr. Charles Royle: Does not the chocolate powder make the worm?

Mr. Elwyn Jones: Perhaps it catches the worm?

Dr. Stross: Yes, it is a bait, to make the worm eat the drug.
On page 4 of this interesting notice I see that medicated plasters are chargeable, and that means that medicated

rings or plasters, of whatever material, for the treatment of all corns and bunions become chargeable. These really are articles that people rightly use by way of self-medication, if one might use the term. Some forms of self-medication are wrong, dangerous, because people not knowing better, may, by using them, become desperately ill before seeking proper treatment.
That cannot be said of the treatment of one's corn or bunion, and it seems rather absurd that because a ring is put round the corrosive material that will soften the corn, the pad or plaster becomes chargeable. Even the mustard leaf on a bandage becomes chargeable, whereas all ordinary forms of bandages, lint, etc., are not chargeable. One finds it hard to see the logic in all this. Nor do I like to see medicated soaps for the treatment of skin conditions being made chargeable.
Again, it seems incredible to me—and I am sure that the hon. Member for Kidderminster will find this interesting—that a farmer may purchase sheep dip and warble fly dressing to rid his sheep of infestation, but that if any hon. Member or citizen suffers an infestation of the scalp by lice, parasites, and so on, he must pay tax on any material that he uses to rid himself of his own infestation. Nobody can maintain that that is very sensible.
There are about 350 to 450 so-called simple drugs that are chargeable. Many of them are very complicated drugs, which no ordinary person would dream of buying because he would not know what they were and probably would never have heard of them. One is called diethyl leneglycolmonoethylether. I do not really think that it is at all likely, Sir Charles, that you would be tempted to buy an excessive amount of that. I have not the vaguest idea what it is for, so it is very unlikely that either you, or the average citizen, would know. Another thing on which one can be called to pay tax is uranium acetate. It may be that the Treasury wants to guard us against the sinister motives of citizens seeking to supply themselves with a uranium compound.
What are we to do about this, and what advice are we to give to the Financial Secretary? It does not seem to me


that the contentions and arguments used by the hon. Member for Kidderminster are by any means completely valid. To argue that because the Tory Party in 1948, divided the House on this issue, must mean that after a lapse of ten years—when so many changes have occurred, some for the better and some for the worse—the present Government must abide by what they then tried to achieve in opposition is, I think, wrong, and shows a failure to understand the way we debate in this House, and what we have in mind in debates of this description.
I am indifferent as to whether or not the hon. Member divides the Committee, and I do not say whether or not I shall support him—he will have to take the chance himself—but one or two things are certain. When we must have revenue, we have the right to tax substances which, though available under their own proper name, are offered to the public, much more expensively, under another name. Therefore, all drugs or medicines which are advertised to the public at large in that way—especially when we have the National Health Service—should be looked at as being right for tax, if tax has to be imposed.
For the rest, I frankly think that there are so many anomalies that both the Minister of Health and the Treasury should look at them. How they can be straightened out, I do not know. Of course, if we were to do what the hon. Member for Kidderminster asks there would be no anomalies, but there would be much unfairness and injustice. I am told that if one spends enough money, one can so advertise bottles of clear water as to get a very high price for them, and we know that vast sums are poured out in advertisements in this industry so as to sell the product.
Here, I am speaking of advertising to the public generally. We should protect ourselves. I remember that when I was a young medical student my surgical tutor—later Lord Moynihan—described how rich was his neighbour, who was the man who, among other things, had invented and marketed Zambuk, and who lived next door to my tutor in a much bigger house. My surgical tutor said that his neighbour had made £1 million from Zambuk, which was, I think, boracic ointment with some green colouring

matter added. The strange thing was, that like anything else, it would cure some people of some things when every real remedy had failed. These things happen in life.
I therefore hope that the Treasury will look again at this matter, consider it carefully, and try to bring a little more order into the obvious and gross anomalies, and the chaos that exists, but I am sure that if the Government were to seek to remit taxation on proprietary goods advertised to the public at large, the majority of the House would be completely against them.

Sir Hugh Linstead: After the very well-informed speeches of my hon. Friend the Member for Kidderminster (Mr. Nabarro) and the hon. Member for Stoke-on-Trent, Central (Dr. Stross), not a great deal remains to be said, but, first, I should probably declare an interest. Although I have no financial concern with the medicine trade, I am secretary of the Pharmaceutical Society.
When my hon. Friend was talking about the debate in 1948 he seemed to suggest that there was likely to be a certain amount of inconsistency in the support of and opposition to his Amendment today. I think, however, that if he had looked a little further he would have found that steady consistency that we always have, which is that the Government take the same view today as did the Government in 1948, and the Opposition today take the same view as the Opposition took in 1948, which seems to be an admirable example of consistency——

Mr. H. Wilson: My right hon. and hon. Friends feel upset that the hon. Gentleman should arrogate to his hon. Friend the Member for Kidderminster (Mr. Nabarro) the title of Her Majesty's Opposition. We regard ourselves, far the time being, at any rate—and for not too long, we trust—as the Opposition. We are not taking the same view on this as did the Opposition in 1948, so the hon. Gentleman really must not identify his hon. Friend with the Parliamentary Opposition.

Sir H. Linstead: When one looks at the Notice Paper, one finds it difficult to separate the Opposition from supporters of the Government.
The great advantage of a brief debate such as this is that it enables Treasury


Ministers to look at certain sections of the incidence of Purchase Tax and consider whether their administration is working satisfactorily or not. Among the many anomalies and injustices of the working of the Purchase Tax system this little group of substances probably shows as many as any other.
As was pointed out earlier by my hon. Friend, we have at present a list, published by the Ministry of Health, of expensive drugs, and of what one might call life-saving drugs, that are exempt from Purchase Tax. Then we have certain other medicines which, provided they are put up in a form not suitable for sale to the public but for use only in dispensing, are also exempt. The result is that, roughly speaking, the public do not pay Purchase Tax on any medicines supplied through the National Health Service, or on those medicines supplied privately on prescription, where the patient pays for the prescription. Nevertheless, Purchase Tax is still paid by the public on the general run of proprietary medicines bought over the chemists' or the grocers' counter.
In the administration of Purchase Tax, the question that the Treasury must ask itself is: are drugs and medicines a suitable item for taxation? I should have thought that, in principle, the answer would be, "No". Traditionally, we have taxed medicines for a couple of hundred years, but the original tax was only on the secret medicine. If a manufacturer kept his formula secret, he had to pay a tax. That dates back to the eighteenth century. Now that, by law, the contents of every medicine must be disclosed on the label, I would have said that that tax—which, after all, is a tax on ill-health—is something that is very difficult to justify——

Mr. Nabarro: Is it not the fact that the very same proprietary product sold in a dispensing pack will not attract Purchase Tax, whereas if sold over the counter, in a druggist's store, it will attract Purchase Tax? Will my hon. Friend apply himself to that point?

Sir H. Linstead: Yes, that is one of the clear anomalies to which I think it is good that the attention of the Treasury Ministers should, from time to time, be directed. I feel fairly certain that the only justification for the continuation of this tax at all is the fact

that about £11 million of revenue accrues to the Treasury as a result, but I would have thought that, as it becomes possible to reduce taxation, so this particular taxation, which can be justified only on revenue grounds, should be one of the earliest items to be reduced. That is the object of the Amendment.
I want to ask my hon. and learned Friend the Financial Secretary the simple question: has not the time come when some of these anomalies and injustices that run through the whole field of Purchase Tax on drugs and medicines should be brought to an end? It can be done by the gradual extension of the list of exempted medicines; it can be done by a reduction in the rate of tax, as the Amendment proposes, but I should have thought that this particular item stood very high among those that compete for priority in the reduction of taxation.
It would be a great pity if proposals on the Notice Paper during the Committee stage of the Finance Bill for reducing Purchase Tax were always decided in advance by the Treasury as a matter of principle, before our debates began. I should have thought that we could with advantage have had a little more elasticity on the part of the Treasury and perhaps a notional sum of money put aside for the reduction of Purchase Tax and decisions taken not in advance but as the debate proceeded, as to whether allocations from the notional sum could be made for specific purposes. If that could be done, a very high priority should be afforded to these items.

Mr. Jay: Surely the hon. Member will recall that that procedure was followed during the Committee stage of the 1948 Bill.

4.15 p.m.

Dr. J. Dickson Mabon: I did not follow the argument of the hon. Member for Kidderminster (Mr. Nabarro) in respect of the Guillebaud Committee recommendations and how they would affect the position under the Amendment. I would appreciate it if he would draw my attention to the recommendation which so argues.

Mr. Nabarro: I did not say that there was a recommendation in the Report of the Guillebaud Committee. I inquired of the Treasury Bench—it was a very


valid point—whether the Government's views on Purchase Tax on proprietary drugs and medicines had in any way changed as a result of the admirable recommendations made by the Guillebaud Committee. That is entirely different.

Dr. Dickson Mabon: I congratulate the hon. Gentleman on his subtlety. However, I want him to direct his attention to a recommendation on page 256 of the Report, to which he was no doubt making an allusion. It reads:
… patients, in their turn, should, as far as possible, be educated out of the 'bottle of medicine habit'.
Probably the hon. Gentleman was referring to that recommendation.
That is an excellent argument against the idea of self-medication. Yet that is precisely on what the hon. Gentleman has been basing his argument. He has said that the right of self-medication must be preserved and that taxation of this kind ought not to infringe it. It is a dangerous right in many ways. Whether the right hon. Gentleman applies it to himself in his hygienic—[HON. MEMBERS: "Not right hon."] I apologise for calling the hon. Gentleman a right hon. Gentleman; I realise that that is not accurate even in anticipation.
It is rather dangerous to argue the question of extending the field of self-medication. The hon. Member for Putney (Sir H. Linstead) will no doubt agree that there are many dangers in widening the use of drugs to ordinary persons who resort to them without medical advice. When the hon. Member for Kidderminster argues the case for the use of these drugs in respect of minor complaints, he does not realise the many tragedies which doctors find have occurred to persons who have treated themselves for so-called minor complaints and arrive in the surgery far too late for anything to be done. It is one of the great tragedies of medical practice. I should prefer that people did not resort to self-medication at all rather than to too much of it. That is why, while I am not arguing that we should impose penal taxation on drugs in order to cut down self-medication, I feel that the hon. Gentleman ought to keep the matter in balance and perspective.
While I do not wish to take sides at the moment—I should like to hear the

other side of the argument—I feel that it was wrong of the hon. Gentleman to imply, however unintentionally, that the Guillebaud Committee blessed his Amendment or that self-medication was such a sound argument to be used in a matter like this.

Mr. Raymond Gower: I think that the danger of self-medication would be appreciated by my right hon. Friend the Member for Kidderminster (Mr. Nabarro) and all of us who support the Amendment. The matter has to be treated reasonably. I think that the danger of preventing self-medication would be equally great. I recall words used by the late Lord Dawson of Penn in a statement that he made in 1939:
Perhaps as a member of the medical profession I ought not to sit down without making perfectly clear that I am not against proprietary medicines as such. I think there are a very large number of proprietary medicines which are harmless, and, further than that, that there are some proprietary medicines which are very efficacious, and anything which would unduly restrict their use would be against the public interest.
It is in that sense that I hope that my hon. and learned Friend will be able to declare the Treasury's attitude.
We are not concerned so much that my hon. and learned Friend should accept the particular Amendment put forward. We want to know whether the Treasury takes the view that these drugs are wholly undesirable and, therefore, should be taxed. We reject that view. It has been estimated that acceptance of the Amendment would cost about £5½ million a year, because it would be a halving of the present tax income. I submit that most of the tax is levied not on some of the more expensive proprietary medicines but on the less expensive proprietary medicines which have established their value over a very long period and now command a very large sale.
That kind of medicine is used particularly by the person faced with a sudden slight ailment or injury, for he knows that that medicine has been demonstrated over a long period as a reputable one and one which can relieve or, in some cases, cure his ailment or injury. The Treasury should take the view that that is preferable to such a person going immediately to a doctor and placing yet another burden on the medical profession and the National Health Service.
That is the point that we ask my hon. and learned Friend to consider. That is the point on which he should state the Government's view. We feel that medicines used in this way ought not to be subject to this kind of taxation. While we accept the view that a concession of £5½ million could not be entertained in the light of the background of the Budget, we hope that my hon. and learned Friend will be able to say that this is an object which the Government will have in mind as they progressively reduce taxation and that they contemplate the application of this principle in the very near future.

Mr. Eric Fletcher: I did not propose to join in the debate about drugs and medicines, but we are discussing with the present Amendment the one which deals with stationery and office requisites other than furniture and machinery.
It is not obvious at first sight what the connection is between patent medicines and office stationery, but they have one thing in common, which is that at present they are subject to Purchase Tax at 30 per cent. Since they share that identity, it is apparently convenient that the two Amendments should be discussed together.
The hon. Member for Kidderminster (Mr. Nabarro) has put forward arguments for reducing Purchase Tax from 30 pet cent. to 15 per cent. on drugs and patent medicines. He has done it admirably, and for reasons which I have no doubt he will support in the Lobby. I hope I shall have his support in the somewhat similar arguments that I am putting forward about Purchase Tax on stationery and office requisites. No hon. Member can study the law relating to Purchase Tax without very considerable enlightenment and profit. In fact, the more one studies it the more mystified one becomes as a result of not merely the anomalies, but some of the complete absurdities in it.
Let us now turn to consider some of the refinements of the provisions of Group 34 (b), in respect of which we should like to see the Purchase Tax reduced from 30 per cent. to 15 per cent. I do not think that hon. Members will be able to appreciate the arguments for our proposition unless they are reminded of the articles which are included in

Group 34 (b). The explanatory memorandum, Notice No. 78, gives some very detailed illustrations of the kind of goods which are now subject to Purchase Tax at 30 per cent. There is, first, notepaper and other stationery, paper and cards. I need hardly say that at the moment we are not dealing with such specialised kinds of literature as greetings cards and Christmas cards; we are dealing with ordinary material on which writing, whether in ink or type or print, appears.
We are dealing with writing, typewriting or duplicating paper, provided that it is of a size less than 229½ square inches in area; that is to say, 17 inches by 13½ inches in area. As my hon. Friend the Member for Oldham, West (Mr. Hale) appreciates, totally different considerations arise when one conies to a piece of paper which exceeds 229½ square inches in area. These provisions apply irrespective of the purpose for which the writing paper is used.

Mr. Leslie Hale: I follow what my hon. Friend the Member for Islington, East (Mr. E. Fletcher) says about paper 229½ square inches in area. I appreciate that if it went to 229¾ square inches in area it might be a disaster. But I do not follow—here I should be grateful for his help—why a memo pad must be 1½ inches by 3 inches at least and not more than 9⅞ inches by 12⅜ inches in area, and if it is below one it attracts tax and if it is above the other it attracts tax. G. K. Chesterton said that the only decent and sensible way of making notes was to lie on one's back in bed with a long piece of chalk and write them on the ceiling. It has always seemed to me that that is one of the ways in which one can impress a thing on one's mind in comfort and decency.

Mr. Fletcher: I am very much obliged to my hon. Friend. I will do my best to enlighten him on the very relevant point which he has introduced. I think he will find that if one uses either a crayon, other than a true pastel, or a piece of chalk to write on a bedroom ceiling one has to pay 30 per cent. Purchase Tax on the crayon or chalk, but if one uses a true pastel to make one's notes on the bedroom ceiling while lying in bed, apparently one is not subject to any Purchase Tax.
It seems to me that this is a differentiation introduced for the benefit of those


who write on bedroom ceilings with true pastels. Why that should be so I do not know, but no doubt that is something that we shall be able to elucidate. Probably the more important point with which my hon. Friend is concerned is the relevance of pieces of paper of the size 1½ inches by 3 inches and 9⅞ inches by 12⅜ inches. I agree with my hon. Friend that one almost needs a magnifying glass to be sure that one is reading this document intelligently.

4.30 p.m.

Mr. Hale: I am sorry to interrupt my hon. Friend again, but what I am interested in is blotting paper, because there are so many blots on my book that I have to use rather an excessive amount of it.

Mr. Fletcher: Blotting paper is covered; all kinds of blotting paper, I think.
My hon. Friend will also appreciate that not only printers' cards but printers' blanks as well as blotting paper and carbon paper are covered, and, as my hon. Friend suggested, blotting paper is taxed at 30 per cent.; blotting paper, whether in roll, or flat, or in cut sizes; and not only blotters, but music manuscript paper as well.
This is really one of the most comprehensive Schedules in the whole of the Purchase Tax. It covers a very wide range indeed. For example, it includes pencils, including slate pencils, pens, including fountain pens, crayons and chalks, pen nibs, including fountain pen nibs, penholders and pencil holders.
The most extraordinary distinction is made with envelopes. Is the Committee aware that ordinary envelopes are subject to tax at 30 per cent.? One might well have thought that it would have been common sense, if there has to be Purchase Tax on envelopes at all, to have placed it on all of them. But that is not the case. Certain envelopes are exempt from the Purchase Tax, for example:
Seed, counter and other envelopes for the packing of goods, if prominently printed on the face and identifiable as such, and not suitable for postal or office use.
Further, charity collection envelopes are exempt if clearly identified. What is more surprising is this. Unprinted pack-

ing envelopes are exempt provided that they are
smaller than 4 inches by 2¾ inches in both dimensions
Imagine the ingenuity involved, if one is a producer or seller of envelopes, in trying to bring oneself within the exemption of Purchase Tax on envelopes.
Then I notice, though I do not understand, that photographic envelopes are exempt but only if of light-proof black or red paper.

Mr. Hale: Not blue?

Mr. Fletcher: Not blue paper. Why that distinction is made is not clear.
Even more curious features occur in this group. We all know what takes place at election times. One notes this anomaly, that ballot papers are subject to Purchase Tax at 30 per cent.; on the other hand, election addresses and ballot cards are exempt from Purchase Tax. What could be the merit of levying Purchase Tax on ballot papers I do not know. Ballot papers are used by the State in Parliamentary elections and by local government authorities in local government elections and, broadly speaking, there are no users of ballot papers except for public official business.

Mr. Hale: And trade unions.

Mr. Fletcher: There may be special cases. For instance, I do not know whether the 1922 Committee has ballot papers.
However, it does seem to me odd that ballot papers should be subject to tax at 30 per cent. Voting by ballot is of the essence of democracy. It is one of the things that we really are trying to maintain by this Finance Bill, and it is not often that we have an opportunity of stating the case for freeing ballot papers from the Purchase Tax. That would be one of the incidental but also one of the most important changes effected if the other Amendment were carried.
The Committee will have observed that practically the whole range of these articles in Group 34 (b) enter into almost every kind of commercial, industrial and social activity. This tax is a tax on literature, a tax on writing, a tax on scholarship, a tax on knowledge. It is an imposition directed to penalise those who write letters. I cannot imagine anything less defensible. I should have thought


that, in this age of civilisation and advancement, just as we exempt printed books and literature from tax, so we should have wanted to encourage the use of writing materials, pens, pencils, fountain pens and letters.

Mr. Hale: I do not know whether my hon. Friend will mind my helping him again—I am sure that he will deal with this more emotionally than I can—but the really criminal thing about this is that there is Purchase Tax on wedding cake bags and nothing on decrees nisi.

Mr. Fletcher: I am sure that my hon. Friend has analysed this in much greater detail than I. Is there a tax on wedding cakes? Certainly, on wedding cake bags, but I am not sure that he is right that there is no exemption in respect of a decree nisi. Why should such documents be charged with Purchase Tax at all?

Mr. H. Wilson: There is the Rent Act.

Mr. Fletcher: Yes, but why should medical records and temperature charts be? I should have thought that the hon. Member for Kidderminster (Mr. Nabarro) would have been at least as anxious about reducing Purchase Tax on medical records and temperature charts as he is about reducing Purchase Tax on proprietary drugs and medicines, because medical records and temperature charts enter into the whole apparatus of every hospital.

Mr. Hale: Guillebaud.

Mr. Fletcher: The National Health Service could not be conducted if it were not for medical records and temperature charts. Why, therefore, penalise the National Health Service by placing Purchase Tax on the most commonplace ingredients which they have to use every day in every hospital?
That is not the end of it. There is tax on blank stamp albums whether with plain or ruled pages and
whether permanently bound or loose-leaf, refill sheets for such albums, and loose-leaf binders for stamp albums of any type.
Why penalise those minded to collect stamps and to put their collections of stamps in stamp albums?
It seems to me that this Schedule not merely imposes a quite harsh and undue

penalty on the whole of industry and commerce, but on every desirable form of educational effort. For example, requisites for typewriters and office machinery, blank cylinders for dictating machines, inked ribbons whether on spools, or in cut lengths, or in bulk, type for office printing, embossing or perforating machinery, developing fluids, and
obliterating and other preparations of the kinds used in connection with office printing and duplicating".
Every possible kind of article used in every office in the country labours under this pernicious tax at 30 per cent.:
drawing pins, paper clips and fasteners; sample bags of cloth with labels attached…adhesive stationery requisites…adhesive paper…date boxes…Letter sealing waxes"—
I do not want to weary the Committee——

Mr. Nabarro: Hear, hear.

Mr. Fletcher: —by reading this long Schedule. The burden of my complaint is that this is an imposition on this wide range of articles daily used in every office, in every home, in every school. The tax should be reduced from 30 per cent. to 15 per cent. as one stage in a general campaign to abolish it altogether.
I regard subjecting this range of articles to Purchase Tax as wholly unjustified. I believe that public opinion is against it, and I hope that we shall hear from the Chancellor that he is prepared to give us an assurance that tax on goods in this class will be drastically reduced from the present rate of 30 per cent.

Sir Peter Agnew: The hon. Member for Islington, East (Mr. E. Fletcher) has mentioned a very wide range of articles in the Schedule. I want to refer to only one. He addressed a query to the Committee about practice in the 1922 Committee and the use of ballot papers and envelopes. I can answer that without any risk either of breaking the rules of order or of being guilty of a leakage of the proceedings of that Committee. I would say without any hesitation that the solid unanimity within that Committee, born of the reasoned conviction of each and every one of its members, in support of the Conservative Government, has entirely obviated the


need for any ballot papers in the conduct of its proceedings.
I address myself more particularly to the Amendment which has been so ably moved by my hon. Friend the Member for Kidderminster (Mr. Nabarro). I am strongly in support of it. Neither he nor any subsequent speaker has made it clear to the Committee that the drugs and medicines subject to Purchase Tax are not restricted to those which are used for human consumption. The National Farmers' Union has represented that the abatement is highly desirable at this time of the tax on drugs and medicines used by farmers in administering to their animals, sometimes, of course, as a direct prescription or order by a veterinary officer, but by no means always.
If the case can be made out, as I think it can, that every time a human being wants a dose of medicine he does not need to go to a doctor to get a prescription for it, then the case is even stronger when applied to farmers and their animals. Perhaps the farmer is a small man who is anxious to restrict as far as possible his bills for outside expenditure and fees on veterinary officers.
Being quite sure of the symptoms some of the animals have developed, and certainly being able to administer medicine to them, he will be the direct purchaser without prescription of the medicine, and will have to pay, under existing conditions, Purchase Tax upon it. It is at present the policy to assist, if methods can be devised, not only farmers but especially the small farmers, and I think that a reduction of Purchase Tax on these veterinary drugs and medicines would be a very definite way of assisting the small farmers at a time when they are not able to make very great profits. Therefore, I strongly support this Amendment, affecting, as it does, the administering of medicine to animals.

Mr. Percy Holman: I support my hon. Friend the Member for Islington, East (Mr. E. Fletcher) in his comments on the Purchase Tax on stationery. It is the sixth or seventh time since 1945 that I have had to criticise the Government of the day for that. My right hon. Friend the Member for Battersea, North (Mr. Jay) has had to reply on behalf of the Government on

more than one occasion on this matter. It is a subject on which there is almost complete unanimity outside the Front Benches. We shall never find a back bencher to support the present tax on stationery. It affects every man, woman and child.
4.45 p.m.
It was a tax imposed, I think, largely as a result of misunderstanding. Originally, the object of Purchase Tax was to reduce consumption during a period of shortage. It was a wartime Measure, but in later years it extended somewhat beyond the original concept. However, apart from its revenue-raising effect, it still has some elements of that original motive behind it. My hon. Friend the Member for Islington, East (Mr. E. Fletcher) referred to printed envelopes. The method he referred to was introduced by the Customs and Excise to prevent direct taxation of production.
The tax was a misconception from the very first; it always was a retrograde feature of the Purchase Tax. It did not restrict consumption. In fact, consumption of the taxed items of stationery inevitably increased in many ways in wartime conditions through the necessity to fill up more and more forms in industry, commerce, local government and so forth It is a tax which cannot be regarded as having much effect upon the ordinary private consumer. It now yields nearly £40 million, of which the private consumer contributes about £2 million. Thirty million pounds come from industry and commerce and the other £8 million come from education, administration and the rest. Those are round figures.
The oncost added to goods subject to the tax amounts to £30 million, plus a good deal more. There are the wages and salary cost involved in administering it, and there are very often further additions on top in both wholesale and retail distribution. It was, I think, orginally the only Purchase Tax of any consequence with a definite effect upon the costs of industry. Abolition has been advocated by the Federation of British Industries, by the National Chamber of Trade, and by the trade unions concerned in the printing and allied trades. They have all shown a remarkable unanimity throughout about this tax.
I had thought that the Government posed as the businessman's Government, as a Government anxious to reduce the costs of production. They said that they were anxious to help industry. This is one of the taxes which should have caught the eye of the Treasury Ministers first of all in looking at the Purchase Tax from the point of view of reducing the costs of industry and commerce in general, and, to a small extent, the costs of the private individual. Just as important, relatively, is the cost of administration, both central and local.
Although nothing can be done this afternoon in this respect, it is very important that the Government, in considering any further reduction in the Purchase Tax or its abolition, should take this as one of the first items needing attention. My contention is that this Tax is more important than the tax on drugs and the many other things which have been mentioned in recent debates.
It has been a fundamental fallacy of the Government of the day from 1940 onwards that this Purchase Tax had a reducing effect upon consumption. In fact, it was a tax on production. It was a tax on industry. It did not matter at all during times of paper shortage, but in the competitive conditions with which the country is now being faced, although it is relatively a small item, it is an important one in our costs of production, distribution and administration. I hope that the Chancellor of the Exchequer and the Financial Secretary will very carefully consider what should be done about it in the days to come.

Mrs. Harriet Slater: I support all that my hon. Friends have said about the tax on stationery. My view is largely determined by the effect of the tax on stationery used not only in industry but in our schools. Perhaps the Financial Secretary will be able to explain why rubber stamps are not charged but the pad on which one puts a rubber stamp is charged. This seems to be an anomaly.
As regards drugs, could the Financial Secretary tell us why there is included in the list of things which are chargeable protective barrier preparations specially prepared for use in factories solely for

the protection of the skin against occupational dermatitis. When we are doing so much in our factories to try to prevent this occupational disease, which can be a very distressing and protracted one, it seems quite wrong that we should charge to Purchase Tax such a product.
Stoke-on-Trent Members are usually found to be wholly in agreement in the House. The motto for our City is: "United Strength is Stronger." I have, however, one difference of opinion with my hon. Friend the Member for Stoke-on-Trent, Central (Dr. Stross). I find it very difficult to understand why a drug which is nationally advertised should, according to his recommendation, be charged, whereas the simple aspirin should not be charged to Purchase Tax. A tremendous amount of money is spent on the nationally advertised drugs. One very large company, which used to advertise that its product was worth one guinea a box, during the last four years has doubled its 100 per cent. bonus to its shareholders and has paid out a dividend increased from 25 per cent. to 32½ per cent.

Dr. Stross: Will not my hon. Friend agree that she has now answered herself?

Mrs. Slater: No, I will not agree. At the same time, this firm has put up its cost to the consumer. Taking thirty-three items the total cost of which amounted to £4 5s. 9d. in 1954, those same items at the end of last year cost in total £5 8s. 11d. It seems to me that the Chancellor and the interested Government Departments should look at this not merely from the point of view of Purchase Tax but from the point of view of control of national advertising and the amount of money spent thereon which is allowable as a chargeable item. I ask that the Purchase Tax should be removed from all important drugs.

Mr. Douglas Marshall: I wish to reinforce the arguments advanced by my hon. Friend the Member for Worcestershire, South (Sir P. Agnew). I trust that the Minister will look very keenly at the tax on drugs coming within the veterinary group. Her Majesty's Government have repeatedly stated that they are looking carefully at the position of the small farmer and the difficulties with which he has to contend. This tax directly


affects the small farmer. Many small farmers doctor—if that is the right word—their own animals themselves and have to keep these drugs in their houses in order to do so. I think that there is no real difference of opinion between hon. Members on both sides of the Committee about the need to do our best to help the agricultural community as a whole, and it seems quite ludicrous at the same time to impose a tax on the drugs which the farmer has to use.
The Minister may well reply that these things are included because it would be difficult to separate one type of drug from another. This is the usual reply which we are all very used to hearing from the Treasury—this lovely desire for uniformity and for everything to be absolutely correct. Although, quite frankly, I do not expect my hon. and learned Friend to give a reply straight away saying that he will look at the matter to see whether what we ask can be done, I should like him to say that further consideration will be given to the matter before the Report stage and to write one of those little minutes on the sheets of paper which travel through the Treasury saying, "Let the difficulties speak for themselves". I urge upon him the need for excluding the drugs which come within this particular category.

Mr. Douglas Glover: We are all very sorry to see that my hon. and learned Friend has suffered an accident to his finger, but if those at the Treasury put their hands into too many tills they must not be surprised if they sometimes get them trapped. That sort of reflection occurs to one in regard to all these matters of Purchase Tax. The Purchase Tax is supposed to be a tax on consumption. In fact, in many cases it is a tax on health. In other cases, it is a tax on production. These taxes have an unsettling effect upon our whole national life.
I hope that the arguments which have been advanced from both sides of the Committee, particularly in regard to medicines, will be looked at in the Treasury with a view to seeing whether further concessions can be made, if not this year, then in the Budget next year. At the same time, I would only say to my hon. and right hon. Friends and to hon. and right hon. Gentlemen opposite that I wish that the same unanimity we show when we are discussing matters like

Purchase Tax, in trying to have the levels of taxes reduced, could be shown when we come to consider cutting down the expenses of running the nation. If we did show the same measure of agreement on both occasions, the reduction of these taxes would be made very much easier.
There is no doubt that Purchase Tax is regarded as a very happy tax in the Treasury from the Department's point of view, because it is raised without quite the same animosity as is aroused by direct taxation. I am sure that everyone will agree that the idea of raising the level of direct taxation is unthinkable. We are left, therefore, with the problem of raising money by indirect means. Although I have much sympathy with all the arguments put forward today for a reduction of the taxes on drugs, stationery and all the other things, I realise that the Treasury has a great problem confronting it. I hope, therefore, that sympathy and understanding will be shown by our Treasury Ministers in their approach to the problems with which they are trying to cope.

5.0 p.m.

Mrs. Eirene White: We have had a reasonably long and informative debate on two aspects of Purchase Tax, stationery and medicines. We have had arguments from both sides asking that reductions should be made in the tax on these commodities, although I must confess that the arguments in favour of reductions in the tax on medicines have come almost exclusively from the unofficial opposition sitting on the benches opposite.

Mr. Nabarro: A jolly good opposition.

Mrs. White: That is a matter of opinion.
The plea which has been eloquently made by my right hon. Friends for a reduction in the tax on stationery is, I think, very important and serious. It is one that we have had before in Committees on Finance Bills. This particular tax was condemned in the most absolute terms in the debates that we had in 1951, when Lord Clitheroe, better known in this House as Mr. Ralph Assheton, speaking at that time in Opposition, but a very authoritative voice of the party opposite, said:
… this tax"—


that is, the tax on stationery—
is undoubtedly inflationary in its effect and is a direct tax on production. … We believe that this particular tax is a bad tax and that it should be removed."—[OFFCIAL REPORT, 14th February, 1951; Vol. 484, c. 575 and 577.]
So the Financial Secretary must either meet us at least part way or completely disown a gentleman we have always believed to be an authoritative spokesman for the party opposite.
Nothing could be more definite than the quotation I have just given. Of course, this tax is a large revenue-raiser, and we accept that. It brings in about £40 million a year. Therefore, it might be unreasonable to expect the Chancellor to forgo even half that amount. But surely he could do something to modify the tax on some of the articles now included in the taxable section of the formidable list included in Notice No. 78, partly because of its undesirability for British commerce and public life, and partly because of the quite ridiculous anomalies, to some of which my hon. Friend the Member for Islington, East (Mr. E. Fletcher) drew attention. One can hardly mention an item in this list without finding a corresponding peculiarity between those articles which are taxed and those which are exempt. Glancing at the list, I observe that, whereas entry forms for competitions are taxed, fully printed lottery and sweepstake tickets are exempt. That seems to me to be entirely illogical. I will not weary the Committee by going into the extraordinary number of anomalies in the list. It is probably the most anomalous of all the groups of commodities which are now subject to tax.
I draw attention to the fact that the Purchase Tax Joint Standing Committee of the Paper, Printing, and Stationery Trades, which deals with this matter, points out that there have been very considerable difficulties with regard to definition. The Committee is constantly in disagreement with the Customs and Excise, not merely on the question of definition, but also valuation. There is a Government committee on Purchase Tax valuation, and it is recorded that this committee recognises that there are in this field special problems because of the complexity of the list and it has not

been able to find any remedy. Surely one remedy might be to simplify the list.
Even though the Financial Secretary may not feel able to advise the Chancellor, following the debate, that he should remit the tax to the full extent for which we are asking, at least he should meet us part way, because this is a most complicated and onerous tax. As my hon. Friends have pointed out, it affects not only every business in the country but every local authority, public body and educational establishment. Therefore, we think that there is a very good case for action being taken.
When we consider the other group of taxable commodities, namely, medicines and veterinary supplies, the argument is nothing like so convincing. I say at once that I have much more sympathy with the arguments advanced by the hon. Members for Worcestershire, South (Sir P. Agnew) and Bodmin (Mr. D. Marshall) about veterinary supplies than I have with the arugments advanced by the hon. Member for Kidderminster (Mr. Nabarro). There may indeed be hypochondriac cows, but at least they cannot indulge in self-medication. On the other hand, I remind both hon. Members that some of the dangers which arise from medication of human beings might also arise where a farmer, with the best intentions but inadequate knowledge, may use a patent preparation on his animals when he would be much better advised to spend the small amount necessary on consulting a qualified vet.

Sir P. Agnew: An example where that danger would not arise but where the medicine concerned is subject to Purchase Tax is, I understand, sheep dip. One is not likely to drown the animals in it.

Mr. D. Marshall: I agree with the principle of the hon. Lady's argument, but there is no free health service within the veterinary service. Anything that is reduced in veterinary medicine would reduce the total cost to the farmer.

Dr. Stross: Will my hon. Friend bear in mind that sheep dip is exempt? It is substances that are needed for destroying parasites on human scalps which are not exempt.

Mrs. White: I am sure the hon. Member for Worcestershire, South is much easier in his mind now that he has learned


that sheep dip is exempt from tax. On the other hand, I agree that the hon. Member for Bodmin has adduced a powerful argument in saying that there is no free health service for animals. In the case of veterinary production one does not have, as with medicine for human patients, an extremely lengthy list of articles which are exempt and of which the ordinary man or woman can take advantage. After all, that is the main difficulty about the proposal of the hon. Member for Kidderminster.
We have been informed that there is an extremely wide range of drugs and medicaments which are exempt from tax either under the National Health Service or as prescribed by a doctor treating a patient privately. There is no distinction in Purchase Tax between the National Health Service patient and the private patient. So there is no argument there. The tax falls on proprietary articles which people buy for themselves.
If the only alternative were to go to your doctor and obtain a prescription or to pay tax, then the argument would be very much stronger than it is; but that is not so. The truth is that with regard to all these medicines, as the hon. Member for Putney pointed out, we are not allowed by law to have secret formulæ. Medicines have to be compounded of ingredients which are well known, and therefore it is possible to obtain the therapeutic substances contained in these proprietary medicines by asking one's chemist to give one the preparation concerned. If a person is in any doubt, he should go to an intelligent and honest chemist and ask him for whatever he wants.
Why should one support firms that make large profits out of the gullible public by clever advertising and by selling preparations which do them no more good and, one trusts, no more harm than similar preparations which can be obtained without all this paraphernalia of advertising, and so on? May I give one simple example, which I am sure will appeal to all hon. Members? I do not know what quantity of aspirin is consumed in the United Kingdom, but I am sure that it is very considerable. Yet when one reads one of these extremely useful documents for the protection of consumers to which some of us now subscribe, we are informed that

all aspirin, whatever else it is called, is essentially the same thing, and it goes on:
The name 'aspirin'"—
and I confess that I did not know this interesting fact—
comes from spirœa', a botanical group which includes many well known plants like bridal wreath, which are natural sources of salicylic acid. Apart from this, the only material differences are in price. These, as can be seen from the table opposite"—
from which I forbear to quote—
are considerable.
So that it is possible to obtain 25 aspirins for 4d. which will do just as much good as paying 1s. 2d., 1s. 3d., 1s. 8d. or 1s. 8½d. for tablets which are essentially the same but which have a different name and label and which are expensively advertised.
What I have said about aspirin applies to a large range of other materials which can be purchased from a chemist in their basic form if one trusts one's chemist. If a person requires something more elaborate than his chemist is able to advise him about, it is far safer for him to go to his medical adviser. I was interested to observe last night that the Financial Secretary did not trust to self-medication but took professional advice from one of my hon. Friends.

Mr. Gower: While not dissenting from the hon. Lady's main theme, would she not agree that in some cases the aspirin is associated with some other substance which is suitable for people who suffer from various digestive troubles which are accentuated by aspirin?

Mrs. White: Something can be added to aspirin to make it more easily soluble, but that is not worth the difference in price between 4d. and 1s. 8½d.
Where there are certain preparations, as my hon. Friend the Member for Stoke-on-Trent, Central (Dr. Stross) said, which might be suitable for purchase and which are not proprietary in the ordinary sense of the word but which are not included in the tax-free list, that is a matter of adjustment of the list. Any of my medical hon. Friends would be happy to co-operate with the Financial Secretary with regard to things—medicated soap has been mentioned, and one or two others—which ought to be made free of tax without necessarily depriving the Treasury of


tax in general on so many things which are sold to a gullible public at a highly inflated price and which ought, in our view, to be strongly discouraged.

Mr. Simon: We have had a careful and agreeable debate on quite two separate subjects—first, medicine and drugs, and secondly, stationery. I think the hon. Member for Islington, East (Mr. E. Fletcher) was quite right when he said that it is difficult to see what they have in common. They have this in common, that both medicine and drugs, on the one hand, and stationery, on the other, raise a great deal of revenue. That is not a matter than one can entirely disregard in these debates.

Mr. F. H. Hayman: Could the Financial Secretary make inquiries or say how much additional revenue has come in from the sales of aspirin since the Government have been suffering defeats in by-elections and county council elections, and so on?

5.15 p.m.

Mr. Simon: The revenue from the group which contains drugs and medicines is £11 million in all. As the hon. Member for Bethnal Green (Mr. Holman) said, that from stationery is approaching £40 million. It is against this background that I ask the Committee to view the problem as I think it has been viewed.
Turning now to the matter dealt with first, drugs and medicines, the fact is that the tax raises in a year £11 million in revenue and that the proposal contained in the Amendment would mean a loss of revenue of £5½ million.

Mr. Nabarro: Would my hon. Friend adjust the £11 million in respect of the £1½ million which the Minister of Health told me was the Purchase Tax charged as part of the National Health Service Vote, which makes a net loss to the revenue, if the whole of the tax were abated, of only £9½ million?

Mr. Simon: My hon. Friend specifically asked me for that information. I was going to give it to him, but as he has now given it to himself I am relieved of doing so later. Even £9½ million is quite a substantial sum of money.
The second point is that if our aim is really to approach something like a uniform tax on a wide range of goods, we

ought to consider carefully before starting now to erode the width of base of Purchase Tax, and that is the proposal of my hon. Friend the Member for Kidderminster (Mr. Nabarro). He says that this year he only wishes to reduce it to half but that next year he wishes to see it abolished altogether. One is immediately starting to erode the width of base of this tax, and that seems to me dangerous in this sphere.
Having said that this is an important revenue-raiser, as all the Committee have borne in mind, I think we should be agreed again upon a second principle, namely, that nothing should be done which prevents any patient from receiving proper medication. I found myself entirely in agreement with the approach of the hon. Lady the Member for Flint, East (Mrs. White) that this tax, in its present form, combines the need to reconcile those two principles—first, the need to raise revenue, and secondly, to ensure that there is no deprivation of proper medication.
The hon. Gentleman the Member for Stoke-on-Trent, Central (Dr. Stross) gave a number of examples of anomalies in Notice No. 78B. It would be presumptuous on my part to attempt to answer his expertise on these matters, but I will gladly read his speech and consider all the specific matters to which he referred. Also I gladly accept the invitation of the hon. Lady and of my hon. Friend the Member for Putney (Sir H. Linstead), who made the same point; or if any other hon. Members have specific matters which they feel should be adjusted in the Notice, I will gladly consider them.
The hon. Lady the Member for Stoke-on-Trent, North (Mrs. Slater) mentioned barrier preparations. The Notice states specifically:
… barrier preparations (whether or not sold for factory use against occupational dermatitis) perfumed or put up in a form comparable with cosmetics.
I have no doubt that when it is the form substantially of a cosmetic tax is chargeable, but again I will gladly look into the matter.

Dr. Stross: We shall be grateful to the Financial Secretary if he will do so, because the wording in my copy of Notice 78B is as follows:
Protective barrier 'preparations' unperfumed and specially prepared for use in factories


solely for the protection of the skin against occupational dermatitis.
That is under the heading of "chargeable".

Mr. Simon: I may be looking at the wrong Notice. I was looking at Notice No. 78. In any case, I will gladly look into that point now my attention has been drawn to it.
As I said, the scheme of the tax is obviously first to raise Revenue and, secondly, to see that no patient is deprived of proper medical treatment. The way it does this is through exemptions. If hon. Members will look at the exemptions in Group 33 they will see first Group (b) which exempts what are called the official drugs and medicines, that is to say those preparations which are composed of items which appear in certain standard publications, of which the British Pharmacopoeia is the principal one, if they are sold in a non-proprietary and unbranded form. The hon. Gentleman mentioned petroleum jelly. That is a good example of a non-proprietary article which is sold also under proprietary names. I will not mention its common names. The hon. Lady mentioned aspirin. Again we can think of the proprietary names under which such articles are sold. In all those cases a similar article can be obtained under its non-proprietary and unbranded name.
Secondly, that same Group 33 (b) exempts the official preparations in a branded or proprietary get-up when sold in special packs for dispensing purposes only. That was the point made by my hon. Friend the Member for Kidderminster. The intention there is that when such preparations are in dispensing packs, they are not to be sold across the counter to the individual customer, who may or may not require the article—by that I mean need it—for essential medical purposes, but are sold to the pharmacist, who breaks up the pack and retails it as in accordance with the dispensing of a doctor.
Thirdly, there are under Group 33 (c) a long list of essential drugs and medicines whether or not they are marketed in a proprietary form. This list is kept constantly up-to-date by Treasury Order, under constant advice from the experts who are available to advise the Minister of Health. My hon. Friends the Members

for Worcestershire, South (Sir P. Agnew) and Bodmin (Mr. D. Marshall) particularly asked about veterinary preparations. I am advised that included in those essential drugs which are exempt from Purchase Tax are essential drugs which are needed for veterinary purposes. It was for this reason that the hon. Gentleman the Member for Stoke-on-Trent, Central was right when he said that sheep-dip was an exempt preparation.

Mr. D. Marshall: Would my hon. and learned Friend review this matter between now and the Report stage in case what he has just said does not include veterinary drugs to the extent he has stated to the House? The National Farmers' Union and other representatives of the farmers would not, I think, agree with the statement he has just made.

Mr. Simon: I need hardly say that I will gladly respond to my hon. Friend's invitation. There must always be some dispute about what is an essential drug or not, and I do not doubt that the N.F.U. would like to see the list extended. I will certainly look into that matter. In the end, one comes down to this, that anybody who needs it gets his medicine and drugs tax free, and yet there is a large residual expenditure on drugs and medicines of the kind described by the hon. Lady which are, in my submission, properly the subject for taxation and which result in a large revenue to the Exchequer that cannot at the moment be forgone.
Now I turn to the question of stationery. The hon. Gentleman the Member for Islington, East had a great deal of fun, as did other hon. Members, going through the list which is contained in Notice No. 78. The way it works is this: Parliament says that, for example, stationery shall be taxed. Now stationery is a vague term and its borders must, to some extent, be a matter of judgment. What happens, therefore, is that the Customs and Excise get into touch with representatives of the trade and go through individual items to determine what can normally be described as stationery and what is, for example, the raw material for printers.
For this reason, one gets these rather curious measurements that appear constantly in the Purchase Tax Schedule, or rather I should say in Notice No. 78. It


is simply an agreement reached between the Board of Customs and Excise on the one hand and the trade on the other as to what items properly fall within the generic description that Parliament has laid down. I need only add that the Board is always willing, on trade representation or on representation through me by hon. and right hon. Members of this House, to review any particular item or group of items if they seem to be operating unfairly or anomalously.
In the end, as I have said, one comes down to the revenue question. It has been recognised that stationery brings in £36¾ million in a full year, and I could not possibly advise the Committee that it would be right to forgo half that amount by this Amendment.

Mr. Royle: I regret speaking after the hon. and learned Gentleman has wound up the debate. I have listened carefully to his arguments and particularly to the argument of my hon. Friend the Member for Flint, East (Mrs. White). I had the opportunity earlier of hearing the speech of the hon. Member for Kidderminster (Mr. Nabarro) and that of his hon. Friend the Member for Putney (Sir H. Linstead), and it seems to me that there are some

anomalies which should be cleared up. Under those circumstances, I am expressing the hope that the hon. Gentleman will give the Committee this opportunity to express itself in the Lobbies on this matter, so that the Treasury might know just where the Committee stands on these matters. If the hon. Gentleman does this, Sir Norman, I shall be compelled to give him some support.

Mr. Nabarro: In view of the assurance given by my hon. and learned Friend—[Laughter.] Listen. In view of the assurance given by my hon. and learned Friend that it is not desirable to erode the base, and the fact that he is desirous of making progress in the matter of the Nabarro formula for a uniform rate of tax, I beg to ask leave to withdraw the Amendment.

The Temporary Chairman (Sir Norman Hulbert): Is it the Committee's pleasure that the Amendment be withdrawn?

Mr. Royle: No.

Question put, That those words be there inserted:—

The Committee divided: Ayes 0, Noes 233.

Division No. 131.]
AYES
[5.30 p.m.



NIL





TELLERS FOR THE AYES:




Mr. Royle and Mr. A. Evans.




NOES


Agnew, Sir Peter
Bromley-Davenport, Lt.-Col. W. H.
Dugdale, Rt. Hn. Sir T. (Richmond)


Allan, R. A. (Paddington, S.)
Brooke, Rt. Hon. Henry
Duncan, Sir James


Amery, Julian (Preston, N.)
Browne, J. Nixon (Craigton)
Duthie, W. S.


Amory, Rt. Hn. Heathcoat (Tiverton)
Bryan, P.
Eccles, Rt. Hon. Sir David


Arbuthnot, John
Burden, F. F. A.
Elliott, R. W. (Ne'castle upon Tyne, N.)


Armstrong, C. W.
Butcher, Sir Herbert
Emmet, Hon. Mrs. Evelyn


Ashton, H.
Butler, Rt. Hn. R. A. (Saffron Walden)
Errington, Sir Eric


Astor, Hon. J. J.
Campbell, Sir David
Erroll, F. J.


Atkins, H. E.
Carr, Robert
Fell, A.


Baldock, Lt.-Cmdr. J. M.
Cary, Sir Robert
Finlay, Graeme


Baldwin, A. E.
Chichester-Clark, R.
Fletcher-Cooke, C.


Barlow, Sir John
Cole, Norman
Fort, R.


Barter, John
Conant, Maj. Sir Roger
Fraser, Hon. Hugh (Stone)


Beamish, Col. Tufton
Cooke, Robert
Fraser, Sir Ian (M'cmbe &amp; Lonsdale)


Bell, Philip (Bolton, E.)
Cooper, A. E.
Freeth, Denzil


Bell, Ronald (Bucks, S.)
Cooper-Key, E. M.
Galbraith, Hon. T. G. D.


Benn, Hn. Wedgwood (Bristol, S. E.)
Cordeaux, Lt.-Col. J. K.
Gammans, Lady


Bennett, Dr. Reginald
Corfield, Capt. F. V.
Garner-Evans, E. H.


Bevins, J. R. (Toxteth)
Craddock, Beresford (Spelthorne)
Gibson-Watt, D.


Bidgood, J. C.
Crosthwaite-Eyre, Col. O. E.
Glover, D.


Biggs-Davison, J. A.
Cunningham, Knox
Glyn, Col. Richard H.


Bingham, R. M.
Dance, J. C. G.



Birch, Rt. Hon. Nigel
Davidson, Viscountess
Godber, J. B.


Bishop, F. P.
D'Avigdor-Goldsmid, Sir Henry
Goodhart, Philip


Body, R. F.
Deedes, W. F.
Gough, C. F. H.


Boothby, Sir Robert
Digby, Simon Wingfield
Gower, H. R.


Bossom, Sir Alfred
Dodds-Parker, A. D.
Graham, Sir Fergus


Boyd-Carpenter, Rt. Hon. J. A.
Donaldson, Cmdr. C. E. McA.
Green, A.


Boyle, Sir Edward
Doughty, C. J. A.
Grimston, Hon. John (St. Albans)


Braine, B. R.
Drayson, G. B.
Grimston, Sir Robert (Westbury)


Braithwaite, Sir Albert (Harrow, W.)
du Cann, E. D. L.
Grosvenor, Lt.-Col. R. G.




Hall, John (Wycombe)
Low, Rt. Hon. Sir Toby
Ridsdale, J. E.


Hare, Rt. Hon. J. H.
McAdden, S. J.
Roberts, Sir Peter (Heeley)


Harris, Frederic (Croydon, N. W.)
Macdonald, Sir Peter
Rodgers, John (Sevenoaks)


Harris, Reader (Heston)
McKibbin, Alan
Roper, Sir Harold


Harrison, A. B. C. (Maldon)
Mackie, J. H. (Galloway)
Ropner, Col. Sir Leonard


Harrison, Col. J. H. (Eye)
McLaughlin, Mrs. P.
Russell, R. S.


Harvey, Sir Arthur Vere (Macclesf'd)
Maclay, Rt. Hon. John
Scott-Miller, Cmdr. R.


Heald, Rt. Hon. Sir Lionel
MacLeod, John (Ross &amp; Cromarty)
Sharples, R. C.


Heath, Rt. Hon. E. R. G.
Macmillan, Maurice (Halifax)
Shepherd, William


Henderson-Stewart, Sir James
Macpherson, Niall (Dumfries)
Simon, J. E. S. (Middlesbrough, W.)


Hesketh, R. F.
Maddan, Martin
Smithers, Peter (Winchester)


Hicks-Beach, Maj. W. W.
Maitland, Cdr. J. F. W. (Horncastle)
Smyth, Brig. Sir John (Norwood)


Hill, Mrs. E. (Wythenshawe)
Marlowe, A. A H.
Spearman, Sir Alexander


Hinchingbrooke, Viscount
Marshall, Douglas
Speir, R. M.


Hobson, John (Warwick &amp; Leam'gt'n)
Mathew, R.
Stanley, Capt. Hon. Richard


Holland-Martin, C. J.
Maudling, Rt. Hon. R.
Stevens, Geoffrey


Hope, Lord John
Mawby, R. L.
Steward, Harold (Stockport, S.)


Hornby, R. P.
Maydon, Lt.-Comdr. S. L. C.
Steward, Sir William (Woolwich, W.)


Hornsby-Smith, Miss M. P.
Medlicott, Sir Frank



Horobin, Sir Ian
Milligan, Rt. Hon. W. R.
Stoddart-Scott, Col. Sir Malcolm


Howard, Gerald (Cambridgeshire)
Morrison, John (Salisbury)
Storey, S.


Howard, John (Test)
Mott-Radclyffe, Sir Charles
Stuart, Rt. Hon. James (Moray)


Hudson, W. R. A. (Hull, N.)
Nabarro, G. D. N.
Studholme, Sir Henry


Hughes-Young, M. H. C.
Nairn, D. L. S.
Sumner, W. D. M. (Orpington)


Hurd, A. R.
Neave, Airey
Taylor, Sir Charles (Eastbourne)


Hutchison, Michael Clark (E'b'gh, S)
Nicholls, Harmar
Thomas, Leslie (Canterbury)


Hyde, Montgomery
Nicolson, N. (B'n'm'th, E. &amp; Chr'ch)
Thompson, Kenneth (Walton)


Hylton-Foster, Rt. Hon. Sir Harry
O'Neill, Hn. Phelim (Co. Antrim, N.)
Thorneycroft, Rt. Hon. P.


Irvine, Bryant Godman (Rye)
Ormsby-Gore, Rt. Hon. W. D.
Thornton-Kemsley, Sir Colin


Jenkins, Robert (Dulwich)
Orr, Capt. L. P. S.
Turton, Rt. Hon. R. H.


Jennings, Sir Roland (Hallam)
Osborne, C.
Tweedsmuir, Lady


Johnson, Dr. Donald (Carlisle)
Page, R. G.
Vane, W. M. F.


Johnson, Eric (Blackley)
Pannell, N. A. (Kirkdale)
Vickers, Miss Joan


Jones, Rt. Hon. Aubrey (Hall Green)
Partridge, E.
Wakefield, Edward (Derbyshire, W.)


Joseph, Sir Keith
Peel, W. J.
Wall, Patrick


Kaberry, D.
Peyton, J. W. W.
Ward, Rt. Hon. G. R. (Worcester)


Kerr, Sir Hamilton
Pike, Miss Mervyn
Watkinson, Rt. Hon. Harold


Kershaw, J. A.
Pilkington, Capt. R. A.
Webbe, Sir H.


Kimball, M.
Pitt, Miss E. M.
Whitelaw, W. S. I.


Kirk, P. M.
Powell, J. Enoch
Williams, R. Dudley (Exeter)


Lancaster, Col. C. G.
Price, David (Eastleigh)
Wills, G. (Bridgwater)


Langford-Holt, J. A.
Price, Henry (Lewisham, W.)
Wilson, Geoffrey (Truro)


Leather, E. H. C.
Prior-Palmer, Brig. O. L.
Wood, Hon. R.


Leburn, W. G.
Profumo, J. D.
Woollam, John Victor


Legge-Bourke, Maj. E. A. H.
Ramsden, J. E.
Yates, William (The Wrekin)


Legh, Hon. Peter (Petersfield)
Rawlinson, Peter



Lindsay, Martin (Solihull)
Redmayne, M.
TELLERS FOR THE NOES:


Linstead, Sir H. N.
Remnant, Hon. P.
Mr. Oakshott and


Lloyd, Rt. Hon. Selwyn (Wirral)
Renton, D. L. M.
Mr. Brooman-White.

Mr. Roy Jenkins: I beg to move, in page 29, line 16, after "etc.)", to insert:
Group 35 (b) (ii) (bicycles, etc.)".
This Amendment, standing in the name of my hon. Friends and myself, would have the effect of reducing the Purchase Tax on bicycles in Group 35 from 30 per cent. to 15 per cent. I believe that the Amendment is important and that the case, too, is an important one.
Probably all hon. Members in the Committee have received a statement from the trade association with a copy of the statement which the association had previously sent to the Chancellor of the Exchequer. Yesterday, I received a further communication from the trade association—it was a cyclostyled letter, so I imagine that it went to most hon. Members—saying:
With reference to my recent letter on this subject, I think you would like to know that

I have heard this afternoon from Mr. Gerald Nabarro, M.P., that he has tabled an Amendment to the Finance Bill for next Tuesday in his name and that of Mr. Gower.
I was interested to receive this latter and not entirely surprised that the trade association might have assumed that all the Amendments were tabled in the name of the hon. Member for Kidderminster (Mr. Nabarro). I was also interested to see that he had assumed responsibility not only for all the Amendments, but also for the timetable and was able to announce the time and date for which an Amendment had been put down. But I feel that in considering this question of Purchase Tax the Committee should resist its natural temptation to assume that the case so consistently advocated by the hon. Member for Kidderminster must be a bad case.

Mr. Nabarro: In fairness to the Committee, perhaps I might explain that my


Amendment, to which the name of my hon. Friend the Member for Barry (Mr. Gower) is appended, deals not only with bicycles but with a whole range of goods of which bicycles is only one item.

Mr. Jenkins: It is perfectly true that the trade association, in writing, said it was by no means satisfied with the Amendment of the hon. Member for Kidderminster, and thought that in his eagerness to get it on the Notice Paper he might confuse the issue. I therefore gladly accept the statement of the hon. Member, as I am sure the Committee do, but I believe this is an important case so far as bicycles are concerned, and one where we should certainly consider a reduction to 15 per cent.
After all, the bicycle industry is and has been for some little time now a declining industry. It is one of the comparatively few durable consumer goods industries—as I suppose it could be called in a jargonised way—of whose products the British home market is now absorbing less than before the war. I understand that, in 1957, 1 million units were sold on the home market, whereas, in 1938, 1¼ million units were sold.
It is perfectly true that in the decade after the war exports were considerably up and were running appreciably above the pre-war level, so that, despite the decline in the home market demand, the total output of the industry was greater; but since the end of 1954 exports, too, have been declining and during the last three years the position has been that the home and the export demands and inevitably, as a result, the total output of the industry, have been going steadily down.
I believe that the Treasury should have greater sympathy for the position of the bicycle industry at present, because Her Majesty's Government and that industry have this in common: since the Lord Privy Seal's autumn Budget both have been in a state of steady decline. I very much hope, therefore, that Her Majesty's Government will consider whether they cannot do something to assist the plight of this industry, which is now operating at only 50 per cent. capacity and which clearly needs a certain amount of assistance so far as Purchase Tax is concerned.
5.45 p.m.
Although, for many exporting industries, one can argue, without being certain on which side the truth lies, about the effect of a fairly high rate of Purchase Tax on exports—I would not like to say what effect a greater rate of Purchase Tax would have on motor exports at present—and about whether an increase in Purchase Tax increases exports or whether a reduction decreases exports, because of the pull of the home market, nobody can regard those arguments as applying to bicycles. Clearly, there is no danger of an excessive pull of the home market so far as bicycles are concerned.
The bicycle industry is an important exporting industry which is meeting a smaller home market demand than it had before the war and, being most exceptional in this respect, producing a product which is of great importance to many people, the use of which it is desirable to encourage and which attracts a high rate of Purchase Tax, but which has been in steady decline in the past three years, I should have thought that there was a most powerful case for considering a reduction of Purchase Tax on bicycles.

Mr. Martin Lindsay: I am very pleased indeed to support the hon. Member for Stechford (Mr. Roy Jenkins) whom, but for our respective places, I would call my hon. Friend, not least because he is my Parliamentary neighbour and was my opponent in 1945, having left a very agreeable impression in my constituency.
Here is a very good case, and I hope that the Chancellor will consider it. I have always regarded Purchase Tax as an unpleasant tax, but one which has the big merit that it can be used as a shot in the arm when necessary. I believe that the cycle industry needs such a shot in the arm now. One of the difficulties is that tastes change and that people do not use bicycles as much as they used to do. They prefer other means of transport, and that is especially so on the Continent.
The chief difficulty is that nowadays bicycle manufacturing overseas has become merely a normal by-product of light engineering and many countries which were traditional export markets for the British cycle industry for decades no longer take British bicycles because they are making them for themselves.


The most we can now get into many of those export markets is some bicycle parts, such as chains, hubs and so forth, which are rather more difficult to make. I hope the Chancellor will seriously consider the case of the cycle industry for some relief during the very difficult period through which it is now passing.

Mr. Victor Yates: I support the Amendment. There is a very strong case for the industry being given special consideration by the Chancellor. As hon. Members know, Birmingham is an important centre of the bicycle industry. There we have 38 firms manufacturing bicycles and belonging to one trade association, and about 46 firms manufacturing bicycle components.
A serious situation has arisen, because many of the factories are not working to capacity. The position is such that the industry is not working to even 50 per cent. of its capacity. Short-time working is in operation in both the manufacturing and component sides of the industry. Although several of these factories are in the constituency of my hon. Friend the Member for Stechford (Mr. Roy Jenkins), about fifteen of them are in my constituency, and so I have an important constituency interest.
It has been rightly said that to get a good export trade it is important to have a solid home trade as a basis. The British cycle industry is certainly the world's principal supplier and I understand that it has been exporting between £20 million and £30 million worth of bicycles and components a year, including about £5 million worth to dollar areas.
The fact that the export trade with India, Pakistan, Argentina and Brazil has diminished is very serious. We must devote ourselves to seeing how we can restore the industry's capacity to produce and to export as it did before the slump began.
I was surprised to learn that the home market is not as large as it was before the war. I am told that in 1938 we produced 1¼ million units for the home market, whereas today only 1 million units a year are produced for the home market. In view of the prosperity which we are often told we are enjoying, it is surprising that fewer bicycles are being produced for the home market.
I return to an argument which I made yesterday, when I said that it was very difficult to decide what was a luxury and what was not. However, it cannot be argued that a bicycle is a luxury. It has become an important tool of the worker and in view of the greater travelling difficulties experienced by workers nowadays, especially when, as is often the case, they live some distance from their employment, bicycles have become valuable assets. They have also given workers a cheap form of transport.
Apart from that, bicycles have enabled many young people to see the countryside. The bicycle is a means of transport which should not be ignored and I hope that it will not be regarded as a luxury. It is important that we should encourage that which is vital to the economy, a healthy export trade, and that where we see difficulties, such as we are now experiencing in the bicycle industry, something should be done to remedy the situation.
It is deplorable that at least two factories in Birmingham have closed—the Hercules Cycle and Motor Company Limited at Rocky Lane, Aston, Birmingham and another firm—and also the Mercury Industries at Dudley. My hon. Friend the Member for Aston (Mr. J. Silverman) will no doubt have more to say about this matter. Where it has been necessary for a firm to close down a factory because it could not meet competition without more aid, it has been deplorable that that aid has not been forthcoming. The position in Birmingham, Nottingham and other areas must be remedied. We must restore the cycle industry to its previous capacity and this is where the Chancellor has an opportunity to act.
If the Chancellor reduces the tax on the industry, as the Amendment suggests, in the long run the country will derive more benefit than it receives from the tax. The industry will be restored and workers will be kept in employment instead of having to face serious short-time working and factories closing, as is now the case. I hope that the Government will review the matter in the light of the industry's urgent need and accept the principle of the Amendment.

Mr. Frederick Gough: I add my plea that my right hon. Friend should give serious consideration to the


Amendment to deal with the matter, either in the present Bill or later. Each hon. Member who has spoken has represented a city or urban view. There is a new town in my constituency where the bicycle is essential for all workers. The average distance which has to be travelled by a man living in Crawley who has to work in the industrial area is about two miles, and in such circumstances bicycles are most important.
As a representative of an agricultural constituency, I am concerned with the interests of agricultural workers. For them bicycles are a necessity. It is the only way in which they and their wives can go to nearby towns to seek relaxation, or go about their business. Without bicycles, agricultural workers and their wives have the greatest difficulty in registering their votes at local government elections and General Elections, because of the distances involved. I ask my right hon. Friend to consider this Amendment sympathetically, since this is a most important matter.

6.0 p.m.

Mr. Donald Chapman: I wish to add my plea to that of my hon. Friend the Members for Stechford (Mr. Roy Jenkins) and my hon. Friend the Member for Birmingham, Ladywood (Mr. V. Yates), who is so active on behalf of industries in the centre of Birmingham.
The bicycle industry is a classic example of the kind of case that we were discussing when we debated the principles of Purchase Tax yesterday. It was agreed that when an industry fell on bad times there was a good case for flexibility in the use of the tax. If that be so, surely the situation in this year's Budget is little short of fantastic. Other industries, which are by no means in difficulties, though they may be able to present a case in favour of reducing the Purchase Tax on their products, are, so to speak, receiving tax reductions gratuitously. These products include clocks and watches made of precious metal, leather ware, photographic equipment, refrigerators, smokers' requisites—one could go through the whole list of articles where there are Purchase Tax reductions. But the bicycle industry, which is in great difficulty, is not being helped at all.
The situation in this industry is similar to what we have discussed as occurring in the cinema industry. Year after year we have said that it must never be the hand of the Government which finally slays any industry by keeping on a tax too long. If cinemas have to close, let it not be said that taxation killed them. The situation in the cycle industry presents an exact parallel with that in the cinema industry. Cycle firms which are going out of existence might have survived for a longer period but for the substantial tax burden. As has been said, the industry is working at only 50 per cent. capacity. All the major producers without exception are working on short time. Not only have a number of their workers been dismissed, and plant and factory space made idle, but those workers who have been retained are on short time, and that is a disastrous situation.
What can we say about the record of this industry? Has it reason to claim the sympathy of Parliament? As was said by my hon. Friend the Member for Ladywood, its export earnings have been between £20 million and £30 million and it has earned about £5 million a year in dollars. Another reason why this industry deserves the sympathy of Parliament is that its success in the American market has contributed to its present difficulties. American sales were built up from practically nil before the war to about 500,000 a year. This resulted in an outcry from American cycle manufacturers, and import quotas were imposed, so that current exports of British-made cycles to the United States have been cut to about 250,000.
There is a clear case for doing for the cycle industry what we have done in the case of cinemas, for reducing the tax because its present high rate presents a danger to the continued survival of the industry. This is not a small industry. There are over 30 firms in Birmingham. About 160 firms make both cycles and components and are active members of their trade association. About the same number of firms are associated with the industry in one form or another. The depression hitting the bicycle manufacturers affects every firm which provides components. The cycle industry has done its whack for Britain and it is time that Parliament rescued it from its difficulties.

Mr. James Harrison: I wish to join in the chorus of pleas to the Chancellor to reduce the tax on the products of the cycle industry and to refer to the position in Nottingham, where we have the great Raleigh works which employs many thousands of workers.

Mr. Gordon Walker: We had it referred to this afternoon as "Rawleigh".

Mr. J. Harrison: We call it "Raleigh."
I do not wish to repeat the arguments which have already been advanced, but I desire to impress upon the Government the seriousness of the position in Nottingham. The Raleigh Company has spent thousands of pounds in modernising and extending its plant. The contribution of this industry to the export trade is reflected in our improved balance of payments position. Only a few weeks ago the local newspapers headlined the fact that workers at the Raleigh works were going on short time and that many would become redundant. That is a serious position.
I hope that the Chancellor will realise that the position in this industry is so serious that he must reflect carefully before refusing the requests so urgently made to provide a stimulus in the form of a reduction in Purchase Tax on home sales. With a good home market it is possible to substantiate a good export business.

Mr. Arthur Moyle: I wish to support the Amendment. I happen to be an official of the National Union of Public Employees and I appreciated the plea advanced by the hon. Member for Horsham (Mr. Gough) regarding the necessity for bicycles in the rural areas. The bicycle is an essential means of locomotion for the country road work. There are about 300,000 public employees working in the uplands of Britain and in remote places where there are no bus services. They cannot afford motor cycles and the bicycle is their only means of getting to and from their place of employment. The same applies to the quarry workers, agricultural workers and the staffs at rural railway stations.
My right hon. Friend the Member for Smethwick (Mr. Gordon Walker) who represents a constituency contiguous to my own has a number of cycle factories in

his constituency and many of the employees live in my constituency. Therefore, anything which the Chancellor can do to relieve the tax situation will be of great help to a number of my constituents. We have been told by the present Chancellor, and by his predecessors, that Purchase Tax is a revenue raising measure. No one would disagree with that, but the present rate of tax of 30 per cent. constitutes an economic disability on the cycle industry. Here in the last few years we have an example of a declining home market with an improving export trade. I am advised that had it not been for the success of the bicycle industry in the export market, particularly in the U.S.A., things would have gone hard for the British cycle industry.
I know that the right hon. and learned Member for Montgomery (Mr. C. Davies), who is not in the Chamber at the moment, will forgive me for mentioning that the industry has extended its activities in response to Government appeals and has established factories in Wales. At Newtown in Montgomeryshire the Phillips Company has a factory which employs some hundreds of men and women. If this firm closes down, it would mean that Montgomeryshire would be virtually a depressed area. Therefore, the plea for help for this industry is not a sentimental one but is based on solid economic grounds.

Mr. Julius Silverman: A few weeks ago I could have said that I had a strong constituency interest in the cycle industry. There is still in my constituency a factory belonging to the Hercules Company which employs about 1,000 people, but within the next few weeks it is to close down. Even if we have a tax concession now, it will not save this factory. In Birmingham there are factories which only a few years ago employed more than 4,000 people and now they are closed down.
That is serious, not only for Birmingham but for the industry of the country. It means that industrial skills are being lost. Craftsmen are looking for other work. If it is possible in future to recapture some of the export markets; if the present decline is due to temporary difficulties such as currency matters, and the industry has an opportunity to expand again, it will be difficult for that to


happen because the necessary industrial skills may not be available. This is a matter which must be remedied, otherwise we shall have an industry which is incapable of revival.
6.15 p.m.
I ask the Government to consider this as a very serious matter and to listen to the pleas which have been made from both sides of the Committee. The bicycle, as already pointed out, is a necessity. I think that the Government will concede that, and I do not think that it is one of the first articles that ought to be considered for taxation, especially when this taxation will have such a serious effect upon employment and upon the skills of those engaged in the industry—an effect which may, in the future, be detrimental to the export trade. I think that the case is strong enough for the Government to consider whether they can grant a concession to the industry.

Mr. Gordon Walker: It will not have escaped the attention of the Paymaster-General that every hon. Member who has spoken in this debate—and a good many have spoken on both sides of the Committee—is virtually unanimous in the view that there is a very strong case indeed for a concession on the Purchase Tax on bicycles.
There is no doubt that this is a declining industry. I think that 3½ million bicycles were produced in 1955, and that only 2½ million were produced in 1957. This is an extraordinarily sharp decline in the industry and some of its factories are closing—we have heard examples of that—and other factories are in danger of closing. As the hon. Member for Solihull (Mr. M. Lindsay) said, this decline may be in part due to a change in habit. It is very difficult to analyse why industries decline, and it may be that for various reasons people are not so inclined to use bicycles as they were in the past. Unquestionably, the high level of taxation on bicycles has played a very considerable part in bringing about this decline.
As my hon. Friend the Member for Northfield (Mr. Chapman) said, it is when a factory is in decline that a high tax like this is extremely damaging. My hon. Friend drew a very telling parallel with the cinema industry, which the Government have relieved from tax, on the

very ground that what was once a flourishing industry is now in some decline and therefore its decline should not be hastened by the fiscal policy of the Government.
The home market is certainly shrinking. As my hon. Friend the Member for Ladywood (Mr. V. Yates) and my hon. Friend the Member for Stechford (Mr. Roy Jenkins) pointed out, this is a case where a relaxation of tax in order to increase the sales in the home market would really not detract from exports. The industry is working at only 50 per cent. capacity at the moment, a capacity where the unit cost must be beginning to go up unless factories shut down on a very great scale. With an industry working at 50 per cent. capacity, an increase of sales in the home market must help the export drive because an industry such as this must be able to create a substantial home market to form the basis for an export drive.
This is not an argument which I would apply to all cases. I do not think that it applies to all cases, but it seems to me to apply to bicycles. The British bicycle industry is important. It earned last year £24 million in exports, including some £5 million worth of dollars, but the export market has been shrinking. This may be due in part to the fact that a number of foreign countries which used to import our bicycles are now manufacturing their own. It is not a difficult thing to manufacture a simple form of bicycle. The United States tariff went up one-third a few years ago and I understand that there is some Japanese and Czechoslovak competition. It is important, therefore, that this industry should expand and be a means of earning foreign currency for us. It is in considerable difficulties and it should not have those difficulties added to by this very high level of tax.
The bicycle is certainly not a luxury; everyone is agreed on that. We have argued about what is a luxury and what is a necessity. The bicycle is certainly not a luxury. It is a tool of work and something which is primarily used by workers to get to and from work, as well as for pleasure. Bicycles are not only made at Smethwick; they are used there on an enormous scale. I do not know how people in my constituency could get to work if they had to rely on other means of transport, including public transport. At times when the factories


open and close and during the dinner break it is almost impossible to get on the roads because of the vast number of people on bicycles moving to and from work. Many industries depend on bicycles for the transport of their workers to and from their homes up to a few miles away.
My hon. Friend the Member for Oldbury and Halesowen (Mr. Moyle) and the hon. Member for Horsham (Mr. Gough) said that this argument applies also to agricultural workers. They very greatly need bicycles to get about and do their work without a great waste of time or a great expenditure of energy. It is interesting that in West Germany there is a provision by which Income Tax rebate can be made to industrial workers who use bicycles and similar machines for getting themselves to and from work. The need for this has been recognised in West Germany and it is a very great encouragement to the manufacturers of bicycles for the home market in West Germany.
I hope that the hon. Member for Kidderminster (Mr. Nabarro) will support us on this. We are proposing that the tax should come down from 30 per cent. to 15 per cent., which is what I might call the "carpet level" of taxation. It is very convenient for the hon. Member, in propounding what he calls the Nabarro plan——

Mr. Nabarro: The Nabarro formula.

Mr. Gordon Walker: —that the percentage of tax which he suggests should be generalised happens to be the tax on carpets and does not cause him any constituency trouble.

Mr. Nabarro: I have not sought to catch your eye, Sir Gordon, during this debate on bicycles because my views on the matter are expressed in the Amendment in page 29, line 45, at the end to insert:
2. The following provisions shall have effect as respects articles comprised in Group 35 (road vehicles):—
Road vehicles constructed or adapted solely or mainly for the carriage of passengers or having to the rear of the driver's seat roofed accommodation which is fitted with side windows or which is constructed or adapted for the fitting of side windows, shall be chargeable at 15 per cent.
Bicycles, bicycle and sidecar combinations and tricycles constructed or adapted solely

or mainly for the carriage of passengers, bicycle sidecars (including sidecar bodies without chassis) so constructed or adapted, and bicycle sidecar chassis, shall be chargeable at 15 per cent.
Motor units (assembled or unassembled) suitable for fitting to pedal bicycles to equip them with a system of mechanical propulsion, shall be chargeable at 15 per cent.
I should not regard it as equitable or reasonable for bicycles to be treated in isolation from the other forms of mechanically propelled road vehicles detailed in my one omnibus Amendment.

Mr. Gordon Walker: The hon. Member is extremely ingenious in finding reasons for not voting for things which he proposes in the House. If he expects people to take this great campaign of his seriously, he must now and then have the courage of his own convictions and vote for something, but over and over again he finds an ingenious way out at the end of the day.

Mr. Nabarro: It is all part of the Nabarro formula.

Mr. Gordon Walker: It certainly is and that is exactly what we object to. I think that some of his hon. Friends also object to it.
The hon. Member for Solihull made a very brilliant speech on this matter. We certainly propose to divide the Committee on it and we hope that the hon. Gentleman who has felt deeply on this matter will consider voting with us. The case which has been put from both sides has been extremely strong and powerful and if we have to divide the Committee we hope to have some support from hon. Members opposite.

The Paymaster-General (Mr. Reginald Maudling): The subject matter of this Amendment has been very well raised and based on a close study of the bicycle industry. There will be no disagreement in the Committee as to the importance of this industry and the excellent work that it has done, particularly in the export field.
I am bound to say to the right hon. Gentleman the Member for Smethwick (Mr. Gordon Walker) that when it comes to a question of dividing, this Amendment goes much further than bicycles. The effect of this Amendment would be to include bicycles, motor scooters, motor bicycles, motorcycle combinations and three-wheeled motor cars——

Mr. Gordon Walker: If this is the only difference between us, we should not object to a further Amendment at a later stage which would limit the effect to bicycles.

Mr. Maudling: The right hon. Gentleman must not jump to conclusions. I am pointing out the effects of this Amendment and there is no other Amendment before us. The cost of this concession would be £4½ million, which would be a very large sum indeed.

Mr. Gordon Walker: For bicycles?

Mr. Maudling: That would be the cost of this Amendment. I have not the figure for the cost of bicycles only. I have made inquiries and I am told that it would be very difficult to say how much bicycles alone would amount to, but it would be a very substantial proportion of the total sum. One would have to think a long while before picking out one particular form of transport as compared with other forms with which it may compete, to some extent at any rate, and which I understand have always been treated on the same basis.
I think that two arguments have been put forward solely reflecting on the bicycle industry in support of this Amendment. The first is that the bicycle industry is going through difficult times, and the second is that the bicycle is not a luxury. On the first point, there is no doubt that the bicycle industry is having a difficult time. There can be no question about that. It is a matter which the Government must bear in mind when considering the question of Purchase Tax. Certainly my right hon. Friend is well aware of that and will remain well aware of it. It is not, however, a conclusive argument. It would be wrong for the Committee to accept as a conclusive argument the fact that the industry is facing a time of decline in sales.

Mr. Niall MacDermot: I should be greatly obliged if the right hon. Gentleman could explain where in Group 35 (b) there is any reference to motor units and motor scooters, as he has suggested. So far as I can see, there is reference only to
Bicycles, bicycle and sidecar combinations and tricycles constructed or adapted solely or mainly for the carriage of passengers, bicycle sidecars (including sidecar bodies without chassis) so constructed or adapted, and bicycle sidecar chassis.
Motor units are in Group 35 (c).

Mr. Maudling: I am advised that what I have said is correct, but I will have another look at it.
I was about to deal with the question of the bicycle industry, which is the substantial matter that has been raised. I think that it would be wrong to accept as a conclusive argument for a reduction of Purchase Tax the fact that an industry is suffering difficult times.
In the case of the cinema industry the argument has been that the cinemas have been bearing a substantial rate of taxation whereas their other competitors have been exempt from tax. I think that is a rather different case to this particular one.

Mr. Gordon Walker: Would not a closer parallel be the cotton textile industry, where the tax has been virtually removed on the ground that it was a declining industry?

Mr. Maudling: The point that I was making is that there is a distinction here. Here is a case where it is proposed that bicycles should be treated on a lower basis of tax than other things that compete with bicycles, such as motor scooters. That, I think, is not a sound analogy. If an industry is passing through difficult times there may be two reasons. There may be a permanent decline or there may be temporary difficulties.
My hon. Friend the Member for Solihull (Mr. M. Lindsay) referred to some of the more permanent features facing the bicycle industry where the demand may be falling and overseas markets becoming more difficult. If the demand for something is declining because of a permanent change in public demand it may be better for the industry as a whole to readapt itself as quickly as possible to that change. I am not saying that that is 100 per cent. doctrine. I am merely saying that it is perhaps unwise to go in the other direction and assume that art industry must always maintain the same level of production as it had in the past.
6.30 p.m.
If, on the other hand, the industry is facing temporary difficulties, I ought to refer to what my right hon. Friend said yesterday. He agreed that Purchase Tax
in the aggregate yield, could legitimately be adjusted from time to time, but not frequently, according to whether one wants to stimulate


or discourage the purchasing power of the community. That is because we must not allow, even in the aggregate, frequent changes in the total rate. What would not be a good plan would be to vary the individual rates often for any short-term change in circumstances."—[OFFICIAL REPORT, 19th May, 1958; Vol. 588, c. 994.]
In so far as there is a temporary decline, that principle is one which we would wish to follow and to apply.
The position in the bicycle trade, according to statistics with which I have been furnished, is slightly different from what hon. Members have suggested. The main decline in the last year or so has been in exports. Production for export fell from 2,364,000 bicycles in 1955 to 1,596,000 in 1957, which is a very big fall. On the other hand, production in the home market, which fell sharply between 1955 and 1956, went up between 1956 and 1957. The figures which I have are that production in the home market was 864,000 in 1956 and 948,000 in 1957. There are signs of a picking up in the figures which I have been given in the home demand for bicycles.

Mr. Roy Jenkins: Can the right hon. Gentleman say whether the improvement has been maintained in the early months of 1958?

Mr. Maudling: I have not the figures for the early months of 1958. I was going on the 1957 figures. It may be that for production in the home market they are less optimistic than the figure which the hon. Gentleman quoted of 1 million, whereas I gave 948,000.
The bicycle industry is facing more difficult conditions overseas, whereas the home market is smaller than it was before the war; but a lot of industries are smaller than they were before the war. On the other hand, the home market for motor cars is larger than it was before. There must be changes in the pattern of demand for the things produced by industry. The case put forward on these grounds by hon. Members opposite is strong, but it is not conclusive.

Mr. Roy Jenkins: Can the right hon. Gentleman give us examples of comparable goods which are paying much heavier rates of taxation in the home market now than they were before the war?

Mr. Maudling: I cannot do so off-hand. This question of a heavy rate of Purchase

Tax is a little misleading. The 30 per cent. rate for bicycles is the standard rate to which my right hon. Friend referred yesterday. I agree that 30 per cent. is much higher than 15 per cent. and is much heavier than nil but it is not right to describe it as a heavy rate of taxation. The argument for the Amendment, though strong, is not conclusive, particularly in view of the fact that it would be expensive for the revenue.

Mr. M. Lindsay: Would not my right hon. Friend agree that it is not a question of a short-term decline in the export market?

Mr. Maudling: One would not like to be certain about that. It depends upon commercial policy in some of the countries to which we export. The whole pattern of the export trade in Europe and the Commonwealth may change and extend, I hope, considerably in the next few years though the difficulties are very great. It would be unwise to make any prediction one way or the other.
On the question of luxuries there may be many metaphysical things to be said. Does the fact that a bicycle is often used to get people to work make it sometimes a necessity? On the other hand, it is a thing on which one sometimes enjoys oneself. Does this necessarily make it a luxury? I do not know. Certainly it is not treated as a luxury in our Purchase Tax Schedule. It is not taxed at the high rate of 60 per cent. which motor cars carry. It is taxed at the standard rate, which I should have thought was reasonable for something which is in pretty general use.
It is still very much used as a means of locomotion to get people to work, a fact which should help considerably to sustain the home market for bicycles. Reduction of Purchase Tax on bicycles would represent, I understand, a saving of not more than 10d. per week on a year's payment. That is not a very large disincentive to the buying of bicycles by people who really need them to get to work.
Let me sum up. The Amendment would cost £4½ million, a loss of revenue which could certainly not be accepted by my right hon. Friend the Chancellor of the Exchequer.

Mr. Chapman: I understood that that was the total yield of the taxation. If it


is, I would point out that we are only proposing to cut half of it, and that if the Amendment is limited to bicycles the loss will come down to about £1 million.

Mr. Maudling: I said quite clearly that the cost of the Amendment would be £4½ million, and therefore would not be accepted by my right hon. Friend nor is it really what hon. Gentlemen opposite want. They want only bicycles to be exempt, and not the whole range of articles covered by the Amendment.

Mr. V. Yates: The right hon. Gentleman talks of a disincentive to the home market. Can he explain why the number of bicycles produced in the home market was 1½ million less than in 1938? Is not that a serious fall?

Mr. Maudling: The bicycle has become less of a necessity. If the bicycle is necessary to get people to work and if, as I have been informed, the reduction of Purchase Tax proposed in the Amendment means only 10d. a week difference over a year's hire-purchase

payments, the present rate of tax cannot, realistically speaking, be a severe disincentive to the purchase of bicycles.

I must advise the Committee to reject the Amendment, which, as I say, would cost £4½ million and would involve the removal of Purchase Tax from a wide range of articles, to which my right hon. Friend would not agree. Certainly my right hon. Friend will study carefully what has been said about the particular problems and about the bicycle trade, and will keep a close watch upon developments in that industry.

Mr. V. Yates: May we have the information which the hon. Gentleman said he was obtaining upon the coverage of the Amendment?

Mr. Maudling: I am assured that the information which I gave to the Committee about the coverage of the Amendment was correct.

Question put, That those words be there inserted:—

The Committee divided: Ayes 178, Noes 207.

Division No. 132.]
AYES
[6.38 p.m.


Ainsley, J. W.
Diamond, John
Jay, Rt. Hon. D. P. T.


Albu, A. H.
Dodds, N. N.
Jeger, Mrs. Lena (Holbn &amp; St. Pncs, S.)


Allaun, Frank (Salford, E.)
Dugdale, Rt. Hn. John (W. Brmwch)
Jenkins, Roy (Stechford)


Allen, Arthur (Bosworth)
Dye, S.
Jones, J. Idwal (Wrexham)


Allen, Scholefield (Crewe)
Edwards, Rt. Hon. John (Brighouse)
Jones, T. W. (Merioneth)


Bacon, Miss Alice
Edwards, Robert (Bilston)
Kenyon, C.


Bence, C. R. (Dunbartonshire, E.)
Edwards, W. J. (Stepney)
Key, Rt. Hon. C. W.


Benson, Sir George
Evans, Albert (Islington, S. W.)
Lawson, G. M.


Beswick, Frank
Fernyhough, E.
Lee, Frederick (Newton)


Bevan, Rt. Hon. A. (Ebbw Vale)
Fletcher, Eric
Lee, Miss Jennie (Cannock)


Blackburn, F.
Foot, D. M.
Lindgren, G. S.


Boardman, H.
Forman, J. C.
Logan, D. G.


Bonham-Carter, Mark
Fraser, Thomas (Hamilton)
Mabon, Dr. J. Dickson


Bottomley, Rt. Hon. A. G.
Gaitskell, Rt. Hon. H. T. N.
McAlister, Mrs. Mary


Bowden, H. W. (Leicester, S. W.)
George, Lady Megan Lloyd (Car'then)
MacDermot, Niall


Bowen, E. R. (Cardigan)
Gordon Walker, Rt. Hon. P. C.
McGhee, H. G.


Boyd, T. C.
Grenfell, Rt. Hon. D. R.
McGovern, J.


Braddock, Mrs. Elizabeth
Grey, C. F.
McInnes, J.


Brockway, A. F.
Griffiths, David (Rother Valley)
McKay, John (Wallsend)


Broughton, Dr. A. D. D.
Griffiths, Rt Hon. James (Llanelly)
McLeavy, Frank


Brown, Rt. Hon. George (Belper)
Griffiths, William (Exchange)
MacMillan, M. K. (Western Isles)


Brown, Thomas (Ince)
Grimond, J.
MacPherson, Malcolm (Stirling)


Burke, W. A.
Hale, Leslie
Mahon, Simon


Burton, Miss F. E.
Hall, Rt. Hon. Glenvil (Colne Valley)
Mallalieu, E. L. (Brigg)


Butler, Herbert (Hackney, C.)
Hamilton, W. W.
Mann, Mrs. Jean


Butler, Mrs. Joyce (Wood Green)
Hannan, W.
Marquand, Rt. Hon. H. A.


Callaghan, L. J.
Harrison, J. (Nottingham, N.)
Mason, Roy


Carmichael, J.
Hastings, S.
Mayhew, C. P.


Castle, Mrs. B. A.
Hayman, F. H.
Mellish, R. J.


Champion, A. J.
Henderson, Hn. A. (Rwly Regis)
Mitchison, G. R.


Chapman, W. D.
Herbison, Miss M.
Monslow, W.


Clunie, J.
Hewitson, Capt. M.
Moody, A. S.


Coldrick, W.
Holman, P.
Morris, Percy (Swansea, W.)


Collick, P. H. (Birkenhead)
Holmes, Horace
Morrison, Rt. Hn. Herbert (Lewis'm, S.)


Collins, V. J. (Shoreditch &amp; Finsbury)
Hoy, J. H.
Mort, D. L.


Cove, W. G.
Hubbard, T. F.
Moyle, A.


Craddock, George (Bradford, S.)
Hughes, Cledwyn (Anglesey)
Mulley, F. W.


Dalton, Rt. Hon. H.
Hughes, Emrys (S. Ayrshire)
Neal, Harold (Bolsover)


Davies, Ernest (Enfield, E.)
Hunter, A. E.
Oliver, G. H.


Davies, Stephen (Merthyr)
Hynd, J. B. (Attercliffe)
Paget, R. T.


de Freitas, Geoffrey
Irvine, A. J. (Edge Hill)
Paling, Rt. Hon. W. (Dearne Valley)


Delargy, H. J.
Irving, Sydney (Dartford)
Pannell, Charles (Leeds, W.)




Pargiter, G. A.
Ross, William
Tomney, F.


Parker, J.
Royle, C.
Ungoed-Thomas, Sir Lynn


Parkin, B. T.
Shinwell, Rt. Hon. E.
Viant, S. P.


Pearson, A.
Silverman, Julius (Aston)
Wade, D. W.


Pentland, N.
Simmons, C. J. (Brierley Hill)
Weitzman, D.


Popplewell, E.
Slater, Mrs. H. (Stoke, N.)
Wells, William (Walsall, N.)


Price, J. T. (Westhoughton)
Sorensen, R. W.
West, D. G.


Price, Philips (Gloucestershire, W.)
Steele, T.
Wheeldon, W. E.


Probert, A. R.
Stonehouse, John
White, Mrs. Eirene (E. Flint)


Randall, H. E.
Stones, W. (Consett)
Willey, Frederick


Rankin, John
Strachey, Rt. Hon. J.
Williams, David (Neath)


Redhead, E. C.
Stross, Dr. Barnett (Stoke-on-Trent, C.)
Williams, Rt. Hon. T. (Don Valley)


Reeves, J.
Summerskill, Rt. Hon. E.
Willis, Eustace (Edinburgh, E.)


Reid, William
Swingler, S. T.
Wilson, Rt. Hon. Harold (Huyton)


Rhodes, H.
Sylvester, G. O.
Woodburn, Rt. Hon. A.


Roberts, Albert (Normanton)
Taylor, Bernard (Mansfield)
Yates, V. (Ladywood)


Roberts, Goronwy (Caernarvon)
Taylor, John (West Lothian)



Robinson, Kenneth (St. Pancras, N.)
Thomas, George (Cardiff)
TELLERS FOR THE AYES:


Rogers, George (Kensington, N.)
Thornton, E.
Mr. Short and Mr. Deer.




NOES


Agnew, Sir Peter
Gammans, Lady
Longden, Gilbert


Aitken, W. T.
Garner-Evans, E. H.
Low, Rt. Hon. Sir Toby


Allan, R. A. (Paddington, S.)
Glover, D.
McAdden, S. J.


Amory, Rt. Hn. Heathcoat (Tiverton)
Glyn, Col. Richard H.
Macdonald, Sir Peter


Arbuthnot, John
Godber, J. B.
McKibbin, Alan


Armstrong, C. W.
Goodhart, Philip
Mackie, J. H. (Galloway)


Ashton, H.
Gough, C. F. H.
McLaughlin, Mrs. P.


Baldwin, A. E.
Gower, H. R.
Maclay, Rt. Hon. John


Barlow, Sir John
Graham, Sir Fergus
McLean, Neil (Inverness)


Barter, John
Green, A.
MacLeod, John (Ross &amp; Cromarty)


Bell, Philip (Bolton, E.)
Grimston, Hon. John (St. Albans)
Macmillan, Maurice (Halifax)


Bell, Ronald (Bucks, S.)
Grimston, Sir Robert (Westbury)
Macpherson, Niall (Dumfries)


Bevins, J. R. (Toxteth)
Grosvenor, Lt.-Col. R. G.
Maddan, Martin


Biggs-Davison, J. A.
Hall, John (Wycombe)
Maitland, Cdr. J. F. W. (Horncastle)


Bingham, R. M.
Hare, Rt. Hon. J. H.
Marlowe, A. A. H.


Bishop, F. P.
Harris, Frederic (Croydon, N. W.)
Marshall, Douglas


Body, R. F.
Harris, Reader (Heston)
Mathew, R.


Boothby, Sir Robert
Harvey, Sir Arthur Vere (Macclesf'd)
Maudling, Rt. Hon. R.


Boyd-Carpenter, Rt. Hon. J. A.
Harvey, John (Walthamstow, E.)
Mawby, R. L.


Boyle, Sir Edward
Heald, Rt. Hon Sir Lionel
Maydon, Lt.-Comdr. S. L. C.


Braine, B. R.
Heath, Rt. Hon. E. R. G.
Medlicott, Sir Frank


Brooman-White, R. C.
Hesketh, R. F.
Milligan, Rt. Hon. W. R.


Browne, J. Nixon (Craigton)
Hicks-Beach, Maj. W. W.
Morrison, John (Salisbury)


Bryan, P.
Hill, Mrs. E. (Wythenshawe)
Nabarro, G. D. N.


Burden, F. F. A.
Hinchingbrooke, Viscount
Nairn, D. L. S.


Campbell, Sir David
Hobson, John (Warwick &amp; Leam'gt'n)
Neave, Airey


Carr, Robert
Holland-Martin, C. J.
Nicholls, Harmar


Cary, Sir Robert
Hope, Lord John
Nicolson, N. (B'n'm'th, E. &amp; Chr'ch)


Chichester-Clarke, R.
Hornby, R. P.
O'Neill, Hn. Phelim (Co. Antrim, N.)


Clarke, Brig. Terence (Portsmth, W.)
Hornsby-Smith, Miss M. P.
Orr, Capt. L. P. S.


Cooke, Robert
Horobin, Sir Ian
Page, R. G.


Cooper, A. E.
Horsbrugh, Rt. Hon. Dame Florence
Pannell, N. A. (Kirkdale)


Cooper-Key, E. M.
Howard, Gerald (Cambridgeshire)
Partridge, E.


Cordeaux, Lt.-Col. J. K.
Howard, John (Test)
Peel, W. J.


Corfield, Capt. F. V.
Hudson, W. R. A. (Hull, N.)
Peyton, J. W. W.


Craddock, Beresford (Spelthorne)
Hughes-Young, M. H. C.
Pike, Miss Mervyn


Crosthwaite-Eyre, Col. O. E.

Pilkington, Capt. R. A.


Crowder, Petre (Ruislip—Northwood)
Hurd, A. R.
Pitt, Miss E. M.


Cunningham, Knox
Hutchison, Michael Clark (E'b'gh, S.)
Powell, J. Enoch


Currie, G. B. H.
Hutchison, Sir James (Scotstoun)
Price, David (Eastleigh)


Dance, J. C. G.
Hyde, Montgomery
Price, Henry (Lewisham, W.)


Davidson, Viscountess
Hylton-Foster, Rt. Hon. Sir Harry
Prior-Palmer, Brig. O. L.


D'Avigdor-Goldsmid, Sir Henry
Irvine, Bryant Godman (Rye)
Ramsden, J. E.


Deedes, W. F.
Jenkins, Robert (Dulwich)
Redmayne, M.


Digby, Simon Wingfield
Jennings, Sir Roland (Hallam)
Renton, D. L. M.


Donaldson, Cmdr. C. E. McA.
Johnson, Sir Donald (Carlisle)
Ridsdale, J. E.


Doughty, C. J. A.
Johnson, Eric (Blackley)
Roper, Sir Harold


du Cann, E. D. L.
Jones, Rt. Hon. Aubrey (Hall Green)
Ropner, Col. Sir Leonard


Dugdale, R. Hn. Sir T. (Richmond)
Joseph, Sir Keith
Russell, R. S.


Duncan, Sir James
Kaberry, D.
Scott-Miller, Cmdr. R.


Eden, J. B. (Bournemouth, West)
Kerr, Sir Hamilton
Sharples, R. C.


Elliott, R. W. (Ne'castle upon Tyne, N.)
Kershaw, J. A.
Shepherd, William


Emmet, Hon. Mrs. Evelyn
Kimball, M.
Simon, J. E. S. (Middlesbrough, W.)


Errington, Sir Eric
Kirk, P. M.
Smithers, Peter (Winchester)


Erroll, F. J.
Lancaster, Col. C. G.
Spearman, Sir Alexander


Fell, A.
Leather, E. H. C.
Spear, R. M.


Finlay, Graeme
Leburn, W. G.
Stanley, Capt. Hon. Richard


Fort, R.
Legge-Bourke, Maj. E. A. H.
Stevens, Geoffrey


Fraser, Hon. Hugh (Stone)
Lindsay, Hon. James (Devon, N.)
Steward, Harold (Stockport, S.)


Fraser, Sir Ian (M'cmbe &amp; Lonsdale)
Lindsay, Martin (Solihull)
Steward, Sir William (Woolwich, W.)


Freeth, Denzil
Linstead, Sir H. N.
Storey, S.


Galbraith, Hon. T. G. D.
Lloyd, Rt. Hon. Selwyn (Wirral)
Stuart, Rt. Hon. James (Moray)







Studholme, Sir Henry
Turton, Rt. Hon. R. H.
Whitelaw, W. S. I.


Sumner, W. D. M. (Orpington)
Tweedsmuir, Lady
Williams, R. Dudley (Exeter)


Taylor, Sir Charles (Eastbourne)
Vickers, Miss Joan
Wills, G. (Bridgwater)


Temple, John M.
Wakefield, Edward (Derbyshire, W.)
Wilson, Geoffrey (Truro)


Thomas, Leslie (Canterbury)
Wall, Patrick
Woollam, John Victor


Thompson, Kenneth (Walton)
Ward, Rt. Hon. G. R. (Worcester)
Yates, William (The Wrekin)


Thorneycroft, Rt. Hon. P.
Ward, Dame Irene (Tynemouth)



Thornton-Kemsley, Sir Colin
Webbe, Sir H.
TELLERS FOR THE NOES:




Mr. Legh and Mr. Gibson-Watt.

Mr. Ernest Davies: I beg to move, in page 29, line 16, after "etc.)", to insert:
Group 35 (d) (road vehicle chassis, mechanically propelled)".
The effect of this Amendment would be to reduce Purchase Tax on commercial vehicle chassis from 30 per cent. to 15 per cent. In effect, it applies only to goods vehicles because all other vehicles are either taxed separately or exempt. Buses and coaches are exempt and in this class there remains out of the exemption only a goods vehicle.
It is, in our view, undesirable that this tax should remain on the commercial vehicle chassis, because it is a direct tax, either on production when the vehicle is used for transport and production purposes, or on distribution. On vehicles used by industry in the process of production by moving raw materials and semi-finished goods from factory to factory, the effect is to put up the cost on to production. That is because the capital investment involved has to be written off rather rapidly because depreciation is very heavy in the case of goods vehicles.
When they are used for distribution, which is the purpose of most of these vehicles, the cost of distribution is increased and that is most undesirable. The Purchase Tax on this item is practically the only one which is a direct tax on capital investment, because the vehicles must be considered as part of the capital investment of the firm employing them. It is true that some of this transport may be non-essential, particularly in the case of the ancillary user where, on occasion, public transport vehicles could be used instead, but, as the tax falls equally on essential and non-essential transport, it is unfair to maintain it as a disincentive, as it were, to the use of goods vehicles.
When the tax was first imposed, in 1950, the main reason given by the Chancellor for justifying it was that it would discourage excessive capital investment in the production of commercial vehicles. The second reason was that more of these vehicles would be exported if the tax

were imposed. I contend that neither of those reasons stands today. Maintenance of the tax cannot be justified on those grounds. Production has gone up steadily over the years and much of this transport is essential. It is a modern development of road transport and will continue to develop whether the tax is imposed or not. Since the tax was imposed, the number of vehicles on the roads has gone up by half, from 840,000 to 1¼ million.
Also, the purpose was to encourage exports, but today the export market in these commercial vehicles has declined. It was a perfectly sound reason to impose the tax when it was desirable to encourage exports and to discourage production for the home market in a sellers' market, but that reason no longer stands now that there is a buyers' market. So far as it is possible to judge, there is not full production today in output of commercial vehicles.
The actual figures show that the tax encouraged exports in the early days when the industry was in full production and there was a sellers' market. From 1949 exports rose from 48 per cent. of the total production in the first year the tax was introduced, to 62 per cent. and remained at that figure until 1951. From then on the proportion of exported goods vehicles to total production has declined steadily and is now down to 42½ per cent., which is less than it was when the tax was imposed. So that reason for the tax no longer holds good.
So far as I understand, it was never intended when first imposed that this should be a permanent tax. In fact, my right hon. Friend the Member for Battersea, North (Mr. Jay), then Financial Secretary to the Treasury, said, on 15th June, 1950:
of all sections of that programme…
He was speaking of the investment programme—
the excess investment in commercial vehicles is the one which, though, no doubt desirable in itself, can more easily be spared for the time being than anything else…this tax is not intended to be permanent.


That made it quite clear at the time that it was considered desirable to have the tax for the purpose given, but that when that situation no longer held good the tax could be removed.
At that time hon. Members opposite strongly opposed the imposition of the tax. This is what one then Opposition right hon. Member said:
It is a vicious and vindictive tax which is calculated to hit at the small man particularly…. It is a tax on capital goods. We say that a tax on capital goods in this country at the present time is thoroughly evil."—[OFFICIAL REPORT, 15th June, 1950; Vol. 476, c. 572, 578, 581.]
The right hon. Member who said that was no other than the former Chancellor of the Exchequer, the right hon. Member for Monmouth (Mr. P. Thorneycroft).
For these reasons we put forward this Amendment to halve the tax, not to abolish it completely, because we want to act responsibly in this matter. The cost would not be excessive, so far as one can judge from figures given in answer to a Question asked by the hon. Member for Kidderminster (Mr. Nabarro) of the Financial Secretary on 5th May. Total Purchase Tax received in 1957–58 was £14·2 million, but, as there is a countervailing charge to the Inland Revenue in respect of initial allowances and depreciation on a large amount of this investment, the net amount received was only £10·9 million. The net cost of halving the tax would be in the neighbourhood of £5½ million, which is not a very great encroachment on the base to which the Chancellor would object being undertaken at this time.
For those reasons we think it undesirable that this tax on capital goods, which in effect it is, should continue. In view of the situation in the industry, and the desirability of assisting it to lower cost of production and distribution, it is desirable to reduce it.

Mr. Nabarro: It will not have escaped attention that there is a comparable Amendment on the Notice Paper in the names of my noble Friend the Member for Dorset, South (Viscount Hinchingbrooke), my hon. Friend the Member for Twickenham (Mr. Gresham Cooke) and my hon. Friend the Member for Barry (Mr. Gower), all of whom desire, with me, to see the total abolition of Purchase Tax on commercial goods vehicle chassis. The Amendment is in page 29, line 45, at the end to insert:

2. The following provisions shall have effect as respects articles comprised in Group 35:—
Road vehicle chassis, mechanically propelled, shall be exempt from tax.
I understand that that Amendment has not been selected. Therefore, I should be out of order in pursuing the question of total abolition, but, as the hon. Member for Enfield, East (Mr. Ernest Davies) has said shortly and very cogently, there is a powerful case for going half way to the point my hon. Friends and I seek to see achieved, by reducing to only 15 per cent. Purchase Tax on commercial vehicle chassis.
Any hon. Member, on either side of the Committee, who seeks a unilateral relief from Purchase Tax for a particular article always believes that there are special reasons why that commodity should have special consideration. This case, I claim, is absolutely unique. Not only is this item, the commercial goods vehicle chassis, the only item of industrial production capital equipment which attracts Purchase Tax—I stress the only one, but, also—the hon. Member lightly touched on this—it is the only item of industrial equipment subject to the Purchase Tax which attracts, on a generous scale, an annual depreciation allowance.
I want to go a great deal further than the hon. Member, as we are discussing taxation matters, and emphasise that in the case of commercial vehicle chassis the rate of annual depreciation is 25 per cent. per annum on the reducing balance. In addition, there is an initial allowance of 20 per cent. on the chassis. It means that in the first year of use a total of 45 per cent. of the capital cost is chargeable for Income Tax at the standard rate. That sum of money is, therefore, available, in effect, as a refund to the purchaser and owner of the vehicle.
As the cost of the vehicle is accepted by the Inland Revenue as being the aggregation of the basis cost plus the addition of 30 per cent. Purchase Tax, it follows that the whole of the 45 per cent., to which I referred, applies equally to the amount of the Purchase Tax paid, being 30 per cent. of the wholesale value of the commercial vehicle, as also to the basis price, excluding Purchase Tax.
7.0 p.m.
In matters of industrial depreciation, it is true to say that the aggregation of the annual depreciation allowance granted during the length of life of the asset and


the obsolescence allowance granted when the asset is finally scrapped, equate themselves to the historic capital cost of the article. It follows that the amount of Purchase Tax which is paid by a buyer of one of these articles, namely, a chassis, gives what is in effect, an interest-free loan to the Treasury over a period of five years. In that five years, if the vehicle lasts so long—it may last less than five years, and generally does—in that five years the Treasury pay back to the owner of the vehicle the whole of the Purchase Tax which he had initially raid on the chassis.
I say, therefore, that this is a unique state of affairs, because it cannot be argued that it applies elsewhere. Also, it is a means of extracting money from businesses which should be employed as capital resources and sinews for the expansion of production. In 1950, when it was introduced, the whole of my right hon. and hon. Friends and myself voted en masse against the proposition, but we were defeated by 295 votes to 285. The vote was on 15th June, 1950.
As I do not wish to detain the Committee for any length of time on this Amendment, I need only refer to the speech which I was privileged to make on the Motion for the Adjournment on 1st July, 1957, when I set out in close detail all the arguments that then obtained, and still obtain, for doing away with this particular application of Purchase Tax.
It was my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) who, in the course of the leading speech from the Opposition Front Bench on the matter of this particular form of Purchase Tax on 15th June, 1950, coined the phrase that it would be just about as sensible to tax a railway locomotive or a freighter aircraft as it is to tax commercial vehicle chassis, because all these items are essential pieces of industrial transportation equipment of a capital character. I think it has been common ground between both parties in the House that it is undesirable either to place Purchase Tax on tools of trade or to seek to extend Purchase Tax to items of industrial capital equipment.
The right hon. Member for Brighouse and Spenborough (Mr. J. Edwards) will have observed from my earlier speeches on the subject of Purchase Tax, and my

advocacy for a uniform non-discriminatory rate of tax, that I have always been careful to exclude items of capital equipment for industry. In such cases they cannot be considered against the same general background as items of consumer goods. All that happens if we charge Purchase Tax on vehicle chassis is that the money is paid back to the buyer by the Treasury over a period of a few years, in the form of initial, depreciation and obsolescence allowances.
I may add that my efforts in the matter of the removal of Purchase Tax from commercial vehicle chassis have now gone on for four years. I have made many speeches on this topic, and I have had the full support of the British Road Federation, the Society of Motor Manufacturers and Traders, the Federation of British Industries, the National Union of Manufacturers, and practically everybody in the country who is concerned with industrial production.
It would not be true to say, in my view, as the hon. Member for Enfield, East said a few moments ago, that the granting of the concession called for in this Amendment would cost the Treasury approximately £5 million per annum. I do not believe that it would cost the Treasury anything like that sum. If one takes into account the effect of the annual depreciation allowances at 25 per cent. on the reducing balance, added to the initial allowance of 20 per cent., it represents in the aggregate—for we have on the roads more than 1¼ million vehicles, of which 1,075,000 are C-licence vehicles—such a massive return to the buyer in the form of initial and depreciation allowances as almost to equate itself to the notional cost of granting this concession.
If my right hon. and learned Friend who is replying to the debate has any doubts on this point, I would recommend that he should read my Question on 15th May, which was designed to bring out information for the use of hon. Members in this debate. I quote from the OFFICIAL REPORT of that date, from the Written Answers, when I asked the Chancellor of the Exchequer
if he will give approximate figures showing the net yield to the Exchequer of Purchase Tax on commercial vehicle chassis for each of the past five years, after allowing for the loss of direct taxes owing to initial and annual depreciation allowances on commercial vehicles.


That is not the Parliamentary Question to which the hon. Member for Enfield, East referred. The Question I have quoted is much more precise. I put this second Question because I was not fully satisfied with the Answer given to my first Question. I did not regard it as relating the picture as accurately as I wanted to see it related. In reply, the Financial Secretary said:
I regret that the information is not available."—[OFFICIAL REPORT, 15th May, 1958; Vol. 588, c. 43.]
I think it ought to be available. There are 1,075,000 C-licensed vehicles on our roads today. The hon. Member opposite may be quite right in saying that many of them are small vans distributing goods in towns and in the countryside, but approximately half a million of them are long-distance vehicles, and they are capital equipment of industry.
I claim that the cost of the concession which I am advocating—I wish that I could advocate the reduction of the tax to nothing, but I am compelled by the rules of order to request a reduction of 15 per cent.—would be fully offset by the sums of money the Treasury would itself save year by year, in respect of depreciation allowances and initial allowances.
That is a unique and valid argument. I do not claim any special credit for it. The argument has been put to me very cogently by members of the chartered accountancy profession—who have proved to me arithmetically that it applied over a period of years—but it has not previously been voiced in this House as a major contributory factor in the desire to see this tax, which was imposed in June, 1950, swept away.
I shall be in a somewhat difficult and delicate position when the vote is taken on this matter. I do not desire to go into the Lobby with members of the Opposition. My purpose in putting down the Amendment was to ask my right hon. Friend the Chancellor again to review the rate of Purchase Tax having regard to the depreciation and initial allowances, and to endeavour to give me some satisfaction on the Report stage. The Treasury readily admit that they have not got the figures available to prove my case or otherwise, and they should between now and Report get these figures.
I believe, and the people in the accountancy profession who have been advising me also believe, that the cost of the concession, in the light of what I have said, would be practically nothing, for the total of the initial allowances and the annual depreciation allowances at 25 per cent. per annum would certainly equate themselves to any notional loss in respect of the Purchase Tax concession.
On all these grounds, I wish to support what has been said by the hon. Member for Enfield, East, and I hope that the Chancellor will be able to give me a crumb of comfort when he replies to this important debate.

Mr. Chapman: Before I come to what I have to say on the Amendment, without any disrespect to the learned Solicitor-General, I want to make a strong protest that we have no senior Minister from the Treasury to listen to this case. I do not make this protest in any party sense. I make it because those of us who are associated with the motor car industry and from time to time speak on it in this House, know that one of the grumbles of the industry is that it has had inadequate contact with the Treasury.
I know very well that there are various committees of one kind and another, but one of the grumbles of the industry has always been that the Treasury has never made an adequate study of the motor car industry, has never tried to appreciate its day-to-day problems, and that, in questions of Purchase Tax, as I have discovered by direct inquiry, they are never consulted about possible changes. It is too bad on an occasion like this, when the affairs of this industry are being debated, that there is no Treasury Minister present on the Government Front Bench.
This is an important matter for the further reason that this is an industry which is earning some £500 million in our exports. It is not very much of a compliment when we are debating the industry that neither the Chancellor of the Exchequer, the Financial Secretary to the Treasury nor the Paymaster-General, who have responsibilities in these fields, are on the Front Bench; but this is what we get, and I take a very poor view about it and hope that something can be done to


remedy it before we come to the end of this short debate. [Laughter.] I see that hon. Gentlemen opposite are laughing, but I say this in no party spirit. This has been the trouble with the motor car industry from time immemorial, that inadequate attention has been given to it in the Treasury. The Treasury accepts very thankfully and with occasional words of praise the industry's magnificent export record, and this is all we get in return.
This is a notorious example of the way in which a tax once put on, however irrationally, cannot be got rid of. We have had it time and time again throughout the history of taxation in this country, and no matter how slender the original justification for its imposition may have been, we have to spend many years trying to get it off, even if the circumstances have changed. I think it is true today that there is no tax which is less defensible than this one.
I am not going to rehearse all the points that have been put by the two hon. Members who have preceded me. It is absolutely true, as my hon. Friend the Member for Enfield, East (Mr. Ernest Davies) said, that it was never intended to be permanent. It is absolutely true that it was imposed in 1950 primarily in order to decrease the investment in the motor car industry at that time—that was the justification given by my right hon. Friend the Member for Battersea, North (Mr. Jay)—and, partly, to relieve the demands made by the metal-using industries in the rearmament drive of that period. It was part of that difficult situation, but now, when all those grounds have gone, we still have this tax. It is true, as both my hon. Friends and the hon. Gentleman opposite have said, that nearly all this is a direct tax on capital equipment. I do not want to plead my own special case concerning the equipment of the hotel industry——

Mr. Nabarro: The hon. Gentleman will appreciate that I dealt with industrial production capital equipment. I am sure that the hon. Gentleman would not pretend that the hotel business is industrial in character.

Mr. Chapman: No, I am not making any point about that. I am only saying that we must not go too far in this matter.
It is certainly true that it is a direct contributor to higher cost of living when it is such a direct imposition on the movement of goods throughout the country. It is also true that the figures of the last few years do not prove that the tax has in any way really heavily or substantially stimulated exports. Exports have been running at 100,000 to 150,000 vehicles per annum, and have ebbed and flowed with the fortunes of the motor car exporting industry generally. I do not think that the tax on commercial vehicles has had a direct or a substantially direct relationship to the number exported, but the fact that they have done so well is a credit to an industry which has been earning about £60 million to £100 million annually by way of exports.
7.15 p.m.
Having said that the case for the tax is quite indefensible, having supported all that has been said by the two hon. Gentlemen, I think that it might be helpful if I were just to try to consider what I think is in the mind of the Government. It is right that we should seek to be as responsible as possible and try to see what may be some of the difficulties in the way of relaxing this tax.
One of the first difficulties that has to be put in the scales against the arguments of speakers against the tax, including myself, is that if we leave a very great gap between the price of the small, light commercial vehicle and its opposite number among the smaller private cars we may be artificially channelling purchases into the commercial vehicle sector. We may be stimulating it, quite wrongly, in that way. This is undoubtedly a danger because of the following facts and figures.
The present retail price of a 5 cwt. commercial vehicle is probably of the order of £400 or £450. To buy its nearest equivalent in the passenger-carrying range will cost at least £500, and probably more than £550. On the other hand, the people buying these vehicles know that with the growth of our big motor car firms we have now reached the stage where the engines used in the small passenger cars and in light vans of the same manufacturer are probably identical. They therefore know that they are buying roughly the same thing, but at a considerable saving if they buy the small commercial vehicle.
When we inquire whether this is, in fact, taking place, I must say that the figures support the right hon. Gentleman's worries. It is true that in any normal quarter nowadays over half of the new registrations of vehicles are in this range of commercial vehicles of under one ton. I do not know how many of them are actually of the 5 cwt. type, where they would be so interchangeable with cars, but I suspect that it is a very large proportion indeed of the total.
Not only that, but we can appreciate the situation from the point of view of the small farmer or the small business man. He will say, rightly in my view, "I can save £100, £150 or even £200 if I just stick to the small 5 cwt. van. It is almost equally useful to me for pleasure. I can take the family away for the day in a small van. The wife can go shopping on market day. When the small business is closed, we can run about in a small van almost as though we were running about in a small car." I can see all that trouble ahead of the Government, and I can understand their fears on this issue.
I would add further that if this House, as I think would be the sensible thing to do, went further and abolished the speed restriction on these small trade vans outside built-up areas—because even outside the built-up area small vans are still limited by the Road Traffic Act to 30 miles an hour—then, indeed, we would have a situation in which we would be likely to see more and more use made of these vehicles, instead of the people concerned buying small passenger motor cars.
I can therefore see the right hon. Gentleman's fear that if to these present problems we add the fact that we might, by reducing the tax on a small commercial vehicle by £30 or £50, increase the differential still further, we would artificially stimulate the market for these vehicles as against their nearest equivalent in small passenger cars.
I put the Government case strongly, because I think that it is right that we should all be responsible on this matter. I concede that there is great force in that argument. I would only say to the right hon. Gentleman, to counterbalance what I have been saying, that we have at least to make a start. I do not mind the fact that we cannot, perhaps, reduce it enormously

in the first go. I do not mind particularly, if I may be frank, if he just gives the assurance that we are to get some substantial, significant, reduction of tax in the whole range of motor cars next year, or the year after, but I do say that we must begin to get this matter right.
The arguments with which I started off are still true—that it is capital equipment that is being taxed; the effect on the cost of living, and the fact that it has not substantially affected exports. All those things are still true, and we have to make some compromise between the two points of view, and we must begin to reduce the tax on these vehicles.
I plead, and I shall plead again—and ask the Government to be good enough to give a direct answer—that we should have some proper consultation with the industry about the whole incidence of this taxation. It has really got into a disgraceful muddle now. It is wrong that this tax should be retained largely for revenue purposes long after its justification has disappeared. We should have an assurance that, in the months to come, the Treasury will be willing—as it has done in the case of the cinemas, for instance, in previous years—to argue at top level all the industry's complexities. I should be very happy if we could get that assurance.
Another thing that might influence the mind of the right hon. Gentleman is the danger that if the tax is reduced home sales will increase at the expense of exports, and that the industry might again begin to put less energy into its export drive. I have expressed at other times these fears about the attitude of the motor-car industry, but all that I have seen in the last few years—and I will pay the industry this tribute—leads me to believe that it has learned the lesson of 1955 and 1956.
That was a time when an artificial atmosphere was created by the then Chancellor of the Exchequer. the present Lord Privy Seal; when it was thought that all our economic problems were solved; when we had the Election Budget, and when everything was to be so easy. It was then that, like other industries, the motor-car industry was not on its mettle in the export drive. It was accepting a great deal of the false optimism that


was propagated by the Lord Privy Seal. Since then, as I say, I think that it has largely learned its lesson.
The motor industry has done so much to improve its competitive position overseas; it has so improved its after-sales service and spares service; it has so wormed its way into markets all over the world and has spent so much money on expanding its overseas service that I think it has gained a new momentum that would not easily sag if it got this increased possibility of sales on the home market.
I, for one, do not feel that this danger is now so prevalent that there would be a reduction in export sales if the tax were reduced for home sales. The point is that if the average tax today of £100 on a commercial vehicle were halved, there would be an increase in home sales, but I think the industry would be able to expand its production to take care of that without eating into its export drive.
When I come to the final point on that issue, I return to what I was saying on the previous one, namely, that in all this the crucial thing is to consult the industry. If the Government were to get the industry round the table and say, "We are moving into a period when we must in all fairness begin to reduce the tax on articles like commercial vehicles. We want your assurance that you will go ahead as well as ever with the export drive", I believe the industry would give that assurance and respond the more for being consulted.
My final plea is that the industry, which has an export record totalling about £500 million a year, requires more consultation with the Treasury and a closer study by the Treasury of its taxation problems. Above all, it needs to feel that the Government realise that the arguments that we have been putting forward today are valid and that some day some of them must be met. I do not know how far the right hon. and learned Gentleman can go today, but if he can begin to give an assurance that the whole taxation field affecting motor cars will be rationalised, I, for one, although I do not secure a reduction in tax, shall be very thankful indeed that the Treasury is beginning to deal with the subject with some energy.

The Solicitor-General (Sir Harry Hylton-Foster): I well understand that

hon. Members dislike to have a mere lawyer answering a point of this kind. The hon. Member for Birmingham, Northfield (Mr. Chapman) has made his protest in very courteous terms. Though Treasury Ministers may be hard-hearted, they have other physical needs, and it is true that for some time they were absent from the Chamber. However, I am confident that I can give the Committee the assurance, if it needs it, that every word uttered in their absence will be studied by them and that no point will be missed through their physical absence from the Chamber while a speech was being delivered.
To answer the hon. Member for Northfield—I have taken the opportunity to seek Treasury support for what I say—if the industry desired to make representations inviting consultation on any point, my right hon. and learned Friend and the other Treasury Ministers would be very delighted to meet representatives of the industry, subject always to the fact that it is, of course, impossible, by reason of normal principles of Budget secrecy, to discuss even with this industry matters such as Purchase Tax or changes in Purchase Tax before the Budget.
If I give a short answer in respect of the Amendment, I hope that hon. Members will not think for a moment that I am doing anything but treating it with the utmost seriousness. Hon. Members will, I know, recognise that the arguments which have been advanced today have frequently been advanced previously. My hon. Friend the Member for Kidderminster (Mr. Nabarro) said that he had made many speeches on the subject. I assure him that he has done so, and that I have read them. I have, indeed, read what my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) said in 1950, and I read it repeated in my hon. Friend's speech in July, 1957, and I have heard it again today.
I dare say that it is certainly true, as the right hon. Member for Battersea, North (Mr. Jay) has said, that this tax was imposed as a temporary tax. Taxes have a way of getting imposed as temporary taxes, but, unhappily, they acquire certain permanent characteristics, and I regret to say that those characteristics are, in connection with this Budget, essentially important.
7.30 p.m.
The actual cost of the Amendment in terms of Purchase Tax would be £7½ million, and it really could not be accepted. Since my right hon. Friend has gone as far as he can in reorganising the Purchase Tax this year with his concession of £41 million for the whole year, he could scarcely be expected to accept a loss of that kind. My hon. Friend the Member for Kidderminster says——

Mr. Ernest Davies: Both the hon. Member for Kidderminster (Mr. Nabarro) and I pointed out that that is the gross cost of the relief of taxation by reason of halving it, but the Treasury gets back a large proportion of that figure in many other ways.

The Solicitor-General: I was coming to that point. The hon. Member, and, in a rather more sweeping form, my hon. Friend the Member for Kidderminster, raised the question of the balancing recovery by reason of reductions of claims on direct taxation. I do not propose to take on my hon. Friend and his chartered accountant supporters on the "technics" of the matter for the moment, but I would commend to him the view that it is extremely difficult to forecast with any precision what the effect of this kind of reduction would be in loss to the Revenue or, as he would put it, total absence of loss to the Revenue, because it all depends on what the effect will be on sales of the reduction in the tax.
If the commercial user, for instance, will be so encouraged by a reduction in the tax that he will buy more vehicles or renew his fleets at shorter intervals to such an extent as to result in the total expenditure on commercial vehicles remaining the same, then it would seem that the Exchequer must suffer loss of Purchase Tax, anyhow on my present view if that be the result of the reduction in tax, because the claims against direct taxation would remain the same in those circumstances.

Mr. John Edwards: Is the right hon. and learned Gentleman assuming in the figure which he has given us that the production of chassis will remain unchanged

and that all other things will remain equal, or has he made some calculation or assumption of the expansion in sales which would follow a reduction in tax?

The Solicitor-General: No, Sir. I was discussing, in connection with my hon. Friend's argument about allowances, the possible consequences of an expansion in sales which would follow a reduction in tax. I am submitting that if the effect of the reduction in tax were to increase sales up to a point where the total expenditure on commercial vehicles came to the same figure as it did previously despite the reduction in tax, it would seem that the Exchequer must, on any view, lose the whole reduction in Purchase Tax, even after allowance is made for the claims against direct taxation.
On the other hand, if the reduction in Purchase Tax did not have that effect and commercial users went on buying the same number of vehicles, I suppose the loss would be a net figure resulting from the loss of Purchase Tax, on the one hand, and the reduced amount of the claims against direct taxation, on the other. But it is not easy—this is the view which I present to the Committee—to see from a Revenue point of view exactly what the consequences of the reduction would be.

Mr. Jay: The right hon. and learned Gentleman will not doubt agree that the Chancellor's own forecast is that after all these reductions the total yield of Purchase Tax alone will be only £4 million less this year than last year.

The Solicitor-General: I do not follow how the right hon. Gentleman fits that on to my efforts to persuade my hon. Friend that he and his accountants had better look at that aspect of the situation before they deduce that no loss would result to the Revenue, which was the point as I saw it.

Mr. J. Edwards: If the right hon. and learned Gentleman could give us just one figure, I think we could begin to be more intelligent about this. Will he tell us what his or the Treasury's estimate for this purpose is of the production of commercial chassis in this financial year, and also the sales, if he has the figure? There must be some figure; otherwise, none of these calculations could have been made. If the right hon. and learned Gentleman


can tell us that, I think that the hon. Member for Kidderminster and I and my hon. Friends would see the matter more clearly.

The Solicitor-General: I cannot give the right hon. Gentleman the figure offhand. I will endeavour to get it before I sit down.
The point which the hon. Member for Northfield was raising about competition between these commercial vehicles and equivalent small cars is a very sound one. I do not wish to put too much upon it, but, making a comparison of purchase prices, I find, for instance, that with the Austin A35 saloon and its equivalent van the difference in price, including Purchase Tax, is that the car is £569-odd and the van is £422-odd. So there is a very real danger there we should have to take note of.
Words are given us for numbers of purposes, one, I suppose, to convey ideas, the other to conceal thoughts, but whatever I were to say to the Committee about this I could not disguise the unpalatable fact that the hard and firm answer, on behalf of my right hon. Friend, must be that in this year he could not accept the loss involved in this Amendment.

Mr. J. Edwards: I should be the last person to want to criticise on the ground that the answer which had been given had been given by a lawyer. I should, however, wish to criticise on the ground of what was said or was not said; rather than on any ground of who said it. I must say outright that I think that the right hon. and learned Gentleman's reply tonight is wholly unsatisfactory and completely inadequate.

Mr. Chapman: Barren.

Mr. Edwards: What did the right hon. and learned Gentleman say? He said at the beginning, and I was glad to hear him say it, that of course the Treasury would be glad to receive representations from the industry at any time. He then quoted my right hon. Friend the Member for Battersea, North (Mr. Jay) speaking in 1950, when he said that the tax was not intended to be permanent. The right hon. and learned Gentleman then said that there are always special reasons why these things which are temporary become in a sense permanent.
However, there were special reasons in 1950, very compelling special reasons, completely in line with what I ventured to say to the Committee yesterday, if I may be permitted to draw attention to that. Sir Stafford Cripps and his colleagues then Members of the Government—I was not myself then involved, the vicissitudes of politics having kept me out of the Chamber a short time—took the view that they really had to do two things. First they had to cut down the total volume of investment, and secondly they had to promote exports in every way they could. The fact remains that the total of exports of commercial chassis which had been 107,000 in 1949 rose to 165,000 in 1950 and went to 162,000 the following year. I do not say there was just a simple relationship between Purchase Tax and exports, but what I claim is that the Chancellor then used this method among others to step up the volume of exports and to contract the volume of home investment.
Having explained that, I come back to the reply we have just been given. The reply rests upon one point only, the loss to the Revenue if this tax were reduced. I asked the right hon. and learned Gentleman if he could give us in more detail the basis on which he had reached this figure of £7½ million. He apparently was not able to do so, but there is some doubt, to put it no higher, that this £7½ million may not be exactly the figure. It may be a calculation made on certain assumptions, and one could make other assumptions in different circumstances. In an overall Budget of this kind, where Purchase Tax is accounting for some £500 million, in circumstances also in which the Government have felt able to reduce tax on luxury items quite considerably, there really ought not to be this great difficulty in finding even this £7½ million.
A quotation has already been made from what the right hon. Gentleman the Member for Monmouth (Mr. P. Thorneycroft) said when the matter was discussed in 1950. My hon. Friend the Member for Enfield, East (Mr. Ernest Davies) quoted part of what the right hon. Gentleman said. I quote again one or two of the words:
We say that a tax on capital goods in this country at the present time is thoroughly evil."—[OFFICIAL REPORT, 15th June, 1950; Vol. 476, c. 572.]


I emphasise the words "at the present time." If that view could be held at all in 1950 I do not for the life of me see how anybody speaking for the Government can say that at this present time this tax is justified.
For all these reasons I find the reply given us unsatisfactory in every way. I cannot see any ground, other than the ground of the £7½ million which has been advocated, for resistance to this Amendment. This must, I think, give very little comfort either to the industry or the people who work in the industry. The arguments which have been put forward moderately and cogently by my hon. Friends and by the hon. Member for Kidderminster (Mr. Nabarro) have not been met at all. The right hon. and learned Gentleman made no attempt to answer the arguments put forward. He rested solely upon this simple point of the £7½ million. For all these reasons, I shall advise my hon. Friends to divide the Committee.

Mr. Nabarro: Before the Division, and as the Chancellor has now returned to the Chamber, may I please make a final plea to him in this matter? In his absence I said that this was an absolutely unique case. Everybody claims, when seeking a Purchase Tax concession, that there is something unique about the case he is pleading, but this one is unique, because I just do not believe that there would be any loss to the Treasury in conceding this Amendment.
I made a mistake in my speech. [HON. MEMBERS: "Oh."] Yes, I made a mistake, because when I said to my right hon. Friend that the initial allowance was 20 per cent. and depreciation allowance was 25 per cent. I ought to have said to him that under this Budget the initial allowance on commercial vehicle chassis is being put up to 25 per cent. Therefore—I want to emphasise this—if a person buys a chassis in the very first year he gets 25 per cent. initial allowance plus 25 per cent. depreciation allowance, and so 50 per cent. goes against Income Tax in the first year, and the reducing balance, the remaining 50 per cent., is thus disposed of at the rate of 25 per cent per annum.
My right hon. Friend cannot give me figures, so he cannot controvert my argument tonight, and so I should be grateful,

and I am sure most of my hon. Friends would be as well, if between now and Report my right hon. Friend would get these figures, because they must be obtainable from the Inland Revenue. On Report I propose in slightly varied form to put down another Amendment on this topic. One could easily seek an Amendment to the initial allowance Clause.

Mr. Frederick Willey: The hon. Gentleman could divide now with the Opposition.

Mr. Nabarro: I shall not divide now with the Opposition because I want to give my right hon. Friend these few weeks to look into this valid point. If he disputes my figures I am perfectly prepared to produce chartered accountancy support for my contention that nothing like the loss mentioned by the Solicitor-General would be entailed in conceding to British industry this important Amendment.

7.45 p.m.

Mr. Chapman: May I support the plea that we should have at least a few words from the Chancellor? The right hon. Gentleman may know that I have already protested that the greater part of the debate took place in the absence of any Minister whatever from the Treasury. I mean no disrespect at all to the right hon. and learned Gentleman who had the job of replying, but I said then, and I repeat now, that it is not good that an industry contributing about £500 million to our exports should not have a Treasury Minister to hear some of its case on an occasion like this. Not only that, but the reply that we have had from the right hon. and learned Gentleman shows again exactly what we complain about, namely, that there is not an adequate study of the industry and its problems made in the Treasury. It is clear that the brief with which the right hon. and learned Gentleman was supplied was as barren as the speech which resulted from it, and I say, with great respect to him——

Mr. E. Partridge: The hon. Gentleman's arrogance is far too great today. He said something about arrogance yesterday, and that is what I say to him today.

Mr. Chapman: I am not being arrogant. I say it now, with great respect to the right hon. and learned Gentleman,


and I have said it all the way through. Our criticism is that the Treasury Ministers have not made a thorough study of the industry and its taxation problems. When we debate the matter, it being of such importance to our national welfare and the export trade, we should be treated to a comprehensive reply on all the issues which we have raised, with the utmost courtesy, during the debate.
Even if we cannot have a promise that something will be done before the Report stage, many of us who try to study the industry and its problems would be grateful if we could think that, during the next twelve months, the Chancellor would be willing, as he was in the case of the cinema industry and other industries, to give special consideration to all the complexities of our industry's taxation problems. If we felt that, perhaps, a year from now we should be debating a thorough statement by the right hon. Gentleman about the taxation problems of the motor car industry—exactly as we were patient about the cinema industry—we should all be very much obliged.
I am sure that those concerned in the industry who have spoken to me from

time to time and have explained that they have never felt that the Government adequately understand their problems would be as grateful as I should be in those circumstances. I should be most obliged if the right hon. Gentleman would say at least a few words on what we regard as the non-party and very substantial case which has been put forward today.

The Chancellor of the Exchequer (Mr. Derick Heathcoat Amory): I am glad to say, of course, that, at any time, I am willing to receive representations from any industry on this kind of problem. Of course, during the succeeding year, I shall be glad to hear anything the industry has to say. But I must emphasise what my hon. and learned Friend has already said, that, on the present evidence we have, I have no grounds upon which I could accept the loss of revenue which would follow from accepting the Amendment.

Question put, That those words be there inserted:—

The Committee divided: Ayes 167, Noes 202.

Division No. 133.]
AYES
[7.49 p.m.


Ainsley, J. W.
Edwards, Rt. Hon. John (Brighouse)
Jones, J. Idwal (Wrexham)


Albu, A. H.
Edwards, Robert (Bilston)
Jones, T. W. (Merioneth)


Allaun, Frank (Salford, E.)
Edwards, W. J. (Stepney)
Kenyon, C.


Allen, Arthur (Bosworth)
Fletcher, Eric
Key, Rt. Hon. C. W.


Bacon, Miss Alice
Forman, J. C.
Lawson, G. M.


Benson, Sir George
Fraser, Thomas (Hamilton)
Lindgren, G. S.


Beswick, Frank
Gaitskell, Rt. Hon. H. T. N.
Logan, D. G.


Blackburn, F.
George, Lady Megan Lloyd (Car'then)
Mabon, Dr. J. Dickson


Boardman, H.
Gibson, C. W.
McAlister, Mrs. Mary


Bonham Carter, Mark
Gordon Walker, Rt. Hon. P. C.
McGhee, H. G.


Bottomley, Rt. Hon. A, G.
Grenfell, Rt. Hon. D. R.
McGovern, J.


Bowden, H. W. (Leicester, S. W.)
Grey, C. F.
McInnes, J.


Bowen, E. R. (Cardigan)
Griffiths, David (Rother Valley)
McKay, John (Wallsend)


Boyd, T. C.
Griffiths, Rt. Hon. James (Llanelly)
McLeavy, Frank


Brockway, A. F.
Griffiths, William (Exchange)
MacMillan, M. K. (Western Isles)


Brown, Rt. Hon. George (Belper)
Grimond, J.
MacPherson, Malcolm (Stirling)


Brown, Thomas (Ince)
Hale, Leslie
Mahon, Simon


Burke, W. A.
Hall, Rt. Hn. Glenvil (Colne Valley)
Mallalieu, E. L. (Brigg)


Burton, Miss F. E.
Hamilton, W. W.
Mann, Mrs. Jean


Butler, Herbert (Hackney, C.)
Hannan, W.
Marquand, Rt. Hon. H. A.


Butler, Mrs. Joyce (Wood Green)
Harrison, J. (Nottingham, N.)
Mason, Roy


Callaghan, L. J.
Hastings, S.
Mayhew, C. P.


Carmichael, J.
Hayman, F. H.
Mellish, R. J.


Castle, Mrs. B. A.
Herbison, Miss M.
Mitchison, G. R.


Chapman, W. D.
Hewitson, Capt. M.
Moody, A. S.


Clunie, J.
Holman, P.
Morris, Percy (Swansea, W.)


Coldrick, W.
Howell, Denis (All Saints)
Morrison, Rt. Hn. Herbert (Lewis'm, S.)


Collick, P. H. (Birkenhead)
Hoy, J. H.
Mort, D. L.


Collins, V. J. (Shoreditch &amp; Finsbury)
Hubbard, T. F.
Moyle, A.


Cove, W. G.
Hughes, Cledwyn (Anglesey)
Mulley, F. W.


Craddock, George (Bradford, S.)
Hughes, Emrys (S. Ayrshire)
Neal, Harold (Bolsover)


Dalton, Rt. Hon. H.
Hunter, A. E.
Oliver, G. H.


Davies, Ernest (Enfield, E.)
Hynd, H. (Accrington)
Orbach, M.


de Freitas, Geoffrey
Irvine, A. J. (Edge Hill)
Paget, R. T.


Delargy, H. J.
Irving, Sydney (Dartford)
Paling, Rt. Hon. W. (Dearne Valley)


Diamond, John
Jay, Rt. Hon. D. P. T.
Palmer, A. M. F.


Dodds, N. N.
Jenkins, Roy (Stechford)
Pannell, Charles (Leeds, W.)


Dugdale, Rt. Hn. John (W. Brmwch)
Jones, David (The Hartlepools)
Pargiter, G. A.


Dye, S.
Jones, Elwyn (W. Ham, S.)
Parker, J.




Parkin, B. T.
Silverman, Julius (Aston)
Wade, D. W.


Pearson, A.
Silverman, Sydney (Nelson)
Weitzman, D.


Pentland, N.
Simmons, C. J. (Brierley Hill)
Wells, William (Walsall, N.)


Popplewell, E.
Slater, Mrs. H, (Stoke, N.)
West, D. G.


Price, J. T. (Westhoughton)
Sorensen, R. W.
Wheeldon, W. E.


Price, Philips (Gloucestershire, W.)
Steele, T.
White, Mrs. Eirene (E. Flint)


Probert, A. R.
Stewart, Michael (Fulham)
Wilcock, Group Capt. C. A. B.


Randall, H. E.
Stonehouse, John
Willey, Frederick


Rankin, John
Stones, W. (Consett)
Williams, David (Neath)


Redhead, E. C.
Strachey, Rt. Hon. J.
Williams, Rev. Llywelyn (Ab'tillery)


Reid, William
Stross, Dr. Barnett (Stoke-on-Trent, C.)
Williams, Rt. Hon. T. (Don Valley)


Rhodes, H.
Sylvester, G. O.
Willis, Eustace (Edinburgh, E.)


Robens, Rt. Hon. A.
Taylor, Bernard (Mansfield)
Woodburn, Rt. Hon. A.


Roberts, Albert (Normanton)
Taylor, John (West Lothian)
Yates, V. (Ladywood)


Roberts, Goronwy (Caernarvon)
Thomas, George (Cardiff)



Rogers, George (Kensington, N.)
Thornton, E.
TELLERS FOR THE AYES:


Ross, William
Tomney, F.
Mr. Holmes and Mr. Deer.


Royle, C.
Viant, S. P.





NOES


Agnew, Sir Peter
Glyn, Col. Richard H.
MacLeod, John (Ross &amp; Cromarty)


Aitken, W. T.
Godber, J. B.
Macmillan, Maurice (Halifax)


Allan, R. A. (Paddington, S.)
Goodhart, Philip
Macpherson, Niall (Dumfries)


Amory, Rt. Hn. Heathcoat (Tiverton)
Gough, C. F. H.
Maddan, Martin


Arbuthnot, John
Gower, H. R.
Marlowe, A. A. H.


Armstrong, C. W.
Graham, Sir Fergus
Marshall, Douglas


Ashton, H.
Green, A.
Mathew, R.


Atkins, H. E.
Grimston, Hon. John (St. Albans)
Maudling, Rt. Hon. R.


Baldwin, A. E.
Grimston, Sir Robert (Westbury)
Mawby, R. L.


Barlow, Sir John
Hall, John (Wycombe)
Maydon, Lt.-Cmdr. S. L. C.


Barter, John
Hare, Rt. Hon. J. H.
Medlicott, Sir Frank


Bell, Philip (Bolton, E.)
Harris, Frederic (Croydon, N. W.)
Milligan, Rt. Hon. W. R.


Bell, Ronald (Bucks, S.)
Harris, Reader (Heston)
Morrison, John (Salisbury)


Bevins, J. R. (Toxteth)
Harrison, Col. J. H. (Eye)
Nabarro, G. D. N.


Biggs-Davison, J. A.
Harvey, Sir Arthur Vere (Macclesf'd)
Nairn, D. L. S.


Bingham, R. M.
Harvey, John (Walthamstow, E.)
Neave, Airey


Birch, Rt. Hon. Nigel
Heald, Rt. Hon. Sir Lionel
Nicholls, Harmar


Bishop, F. P.
Heath, Rt. Hon. E. R. G.
Nicolson, N. (B'n'm'th, E. &amp; Chr'oh)


Body, R. F.
Hesketh, R. F.
Oakshott, H. D.


Boothby, Sir Robert
Hicks-Beach, Maj. W. W.
O'Neill, Hn. Phelim (Co. Antrim, N.)


Boyle, Sir Edward
Hill, Mrs. E. (Wythenshawe)
Orr, Capt. L. P. S.


Braine, B. R.
Hinchingbrooke, Viscount
Osborne, C.


Braithwaite, Sir Albert (Harrow, W.)
Hobson, John (Warwick &amp; Leam'gt'n)
Page, R. G.


Browne, J. Nixon (Craigton)
Holland-Martin, C. J.
Pannell, N. A. (Kirkdale)


Burden, F. F. A.
Hope, Lord John
Partridge, E.


Butcher, Sir Herbert
Hornby, R. P.
Peel, W. J.


Campbell, Sir David
Hornsby-Smith, Miss M. P.
Peyton, J. W. W.


Carr, Robert
Horobin, Sir Ian
Pike, Miss Mervyn


Chichester-Clark, R.
Howard, Gerald (Cambridgeshire)
Pilkington, Capt. R. A.


Clarke, Brig. Terence (Portsmth, W.)
Howard, John (Test)
Pitman, I. J.


Cooke, Robert
Hudson, W. R. A. (Hull, N.)
Powell, J. Enoch


Cooper, A. E.
Hughes-Young, M. H. C.
Price, David (Eastleigh)


Cooper-Key, E. M.
Hurd, A. R.
Price, Henry (Lewisham, W.)


Cordeaux, Lt.-Col. J. K.
Hutchison, Michael Clark (E'b'gh, S.)
Prior-Palmer, Brig. O. L.


Corfield, Capt. F. V.
Hyde, Montgomery
Ramsden, J. E.


Craddock, Beresford (Spelthorne)
Hylton-Foster, Rt. Hon. Sir Harry
Redmayne, M.


Crosthwaite-Eyre, Col. O. E.
Irvine, Bryant Godman (Rye)
Renton, D. L. M.


Crowder, Petre (Ruislip—Northwood)
Jenkins, Robert (Dulwich)
Ridsdale, J. E.


Cunningham, Knox
Jennings, Sir Roland (Hallam)
Roberts, Sir Peter (Heeley)


Currie, G. B. H.
Johnson, Dr. Donald (Carlisle)
Rodgers, John (Sevenoaks)


Dance, J. C. G.
Johnson, Eric (Blackley)
Roper, Sir Harold


Davidson, Viscountess
Jones, Rt. Hon. Aubrey (Hall Green)
Ropner, Col. Sir Leonard


D'Avigdor-Goldsmid, Sir Henry
Joseph, Sir Keith
Russell, R. S.


Deedes, W. F.
Kerr, Sir Hamilton
Scott-Miller, Cmdr. R.


Digby, Simon Wingfield
Kershaw, J. A.
Sharples, R. C.


Donaldson, Cmdr. C. E. McA.
Kimball, M.
Shepherd, William


du Cann, E. D. L.
Kirk, P. M.
Simon, J. E. S. (Middlesbrough, W.)


Dugdale, Rt. Hn. Sir T. (Richmond)
Lancaster, Col. C. G.
Smithers, Peter (Winchester)


Duncan, Sir James
Langford-Holt, J. A.
Spearman, Sir Alexander


Duthie, W. S.
Leather, E. H. C.
Speir, R. M.


Eden, J. B. (Bournemouth, West)
Leburn, W. G.
Stanley, Capt. Hon. Richard


Emmet, Hon. Mrs. Evelyn
Legh, Hon. Peter (Petersfield)
Stevens, Geoffrey




Steward, Harold (Stockport, S.)


Errington, Sir Eric
Lindsay, Hon. James (Devon, N.)
Steward, Sir William (Woolwich, W.)


Fell, A.
Lindsay, Martin (Solihull)
Storey, S.


Finlay, Graeme
Linstead, Sir H. N.
Studholme, Sir Henry


Fort, R.
Lloyd, Rt. Hon. Selwyn (Wirral)
Summers, Sir Spencer


Fraser, Hon. Hugh (Stone)
Low, Rt. Hon. Sir Toby
Sumner, W. D. M. (Orpington)


Fraser, Sir Ian (M'ombe &amp; Lonsdale)
McAdden, S. J.
Taylor, Sir Charles (Eastbourne)


Freeth, Denzil
Macdonald, Sir Peter
Temple, John M.


Galbraith, Hon. T. G. D.
McKibbin, Alan
Thomas, Leslie (Canterbury)


Gammans, Lady
Mackie, J. H. (Galloway)
Thompson, Kenneth (Walton)


Gibson-Watt, D.
McLaughlin, Mrs. P.
Thorneycroft, Rt. Hon. P.


Glover, D.
McLean, Neil (Inverness)
Thornton-Kemsley, Sir Colin







Tiley, A. (Bradford, W.)
Ward, Dame Irene (Tynemouth)
Woollam, John Victor


Turton, Rt. Hon. R. H.
Whitelaw, W. S. I.
Yates, William (The Wrekin)


Vickers, Miss Joan
Williams, R. Dudley (Exeter)



Wakefield, Edward (Derbyshire, W.)
Wills, G. (Bridgwater)
TELLERS FOR THE NOES


Wall, Patrick
Wilson, Geoffrey (Truro)
Mr. Brooman-White and




Mr. Bryan.

Mr. E. C. Redhead: I beg to move, in page 29, line 19, at the end to insert:
(e) articles previously chargeable at 5 per cent. under Group I (garments) shall be exempt from charge.
The object of the Amendment, together with those which are being discussed with it, is to seek entire exemption from tax in respect of garments under Group 1, footwear under Group 2, headgear under Group 3, gloves under Group 4 and handkerchiefs, which are the residue of the highly debatable haberdashery heading under Group 5, with the exception of such articles that fall within those categories which are manufactured of fur. We are going into a comprehensive field in seeking such wholesale exemption, but it is not quite so drastic as it may at first sight appear.
All these articles were chargeable at 5 per cent. before the Budget, with the exception of headgear, which, nevertheless, the Chancellor in the Budget and in the Bill seeks to reduce from 10 to 5 per cent. Articles of fur which are not affected by these Amendments have already been the subject of a substantial reduction in Purchase Tax by the Chancellor's own provisions in reducing the tax on those articles from 50 to 30 per cent., although there has been no corresponding reduction in respect of articles made of less pretentious materials.
Throughout our debates on Purchase Tax there has been an almost unanimous expression of dislike for the tax as such. Even the Chancellor himself has expressed no great degree of enthusiasm or affection for it in principle, although, like all Chancellors who have preceded him since the institution of the tax, he longingly looks forward to the substantial revenue which it produces. On a variety of grounds, the tax has been criticised as bad in principle and practice, and many hon. Members have expressed the hope that it will eventually disappear.
Everyone has recognised that taxes which, for instance, have been introduced during wartime supposedly for the duration of the war, such as Entertainments Duty, which was the product of the 1914–18 war, but which is still with us in

a modified form, and general Excise duties, which, believe it or not, were first introduced in 1643 as a temporary wartime measure which was to cease at the end of the Civil War, but which are still with us in various forms, cannot be suddenly abandoned when they have proved to be so remunerative from the Chancellor's point of view. I recognise that the Chancellor cannot readily forgo the revenue that such a tax produces.
Most hon. Members have been reluctantly reconciled to the idea that the tax, if it is ultimately to disappear, can disappear only by general modification and reduction, first, in the number of rates and, then, in the level of those rates. In that direction, the Chancellor has made some small contribution in the Budget. It has been described as a faltering step in the right direction, and I do not want to rob the Chancellor of the credit in trying to simplify and bring about a greater degree of uniformity with regard to this tax. These Amendments are designed to carry those first faltering steps a stage further in the direction of easing the burden.
Throughout our discussions, despite the differences of opinion which have been manifest about what constitutes a luxury or what constitutes an essential, there has been a general disposition to lighten the load first in respect of what are commonly regarded as the common basis essentials where the application of the tax is most repugnant to the majority of hon. Members. No one would deny that the generality of the articles with which I am concerned in the Amendments of clothing and footwear are among those which can be regarded as the basic essentials in every personal budget. They constitute a not inconsiderable feature of the average personal budget. At today's ruling prices they are a major expense among the small and middle income groups, which are already pressed in many directions by the general rise in prices and diminished incomes which is their growing experience.
To the consumer the exemptions that I seek would be an admittedly small but welcome easement of the burden of ever-pressing demands upon the personal


purse. But there is another reason which ought to commend itself to the Committee and make the Chancellor think again about the imposition of tax in this sphere, and it is of no less importance than that to which I have already referred. At the present moment, practically all branches of the clothing industry and the boot and shoe industry complain of a marked and sharp decline in trade.
I was talking this morning to a boot and shoe tradesman in my constituency who, when I asked him what the condition of his trade was at the moment, was inclined to be a little explosive. He told me that the general experience in the footwear industry was one of a very marked decline, particularly compared with the situation of twelve months ago. I am also told that the general effect is reflected in the trade Press of this industry and is leading to increasing difficulties even on the manufacturing side.
I hear, for example, of a leading boot and shoe manufacturer who supplies many retailers in the London area. He has now gone on to a four-day working week for the first time in many years in his experience. I also made some inquiries of a shirt manufacturer in my constituency who has normally a considerable trade. He tells me that the situation is one of grave alarm throughout that branch of the industry. I am told that this firm only yesterday made inquiry of a leading West End store as to when the manufacturer could expect the customary order for autumn stock, only to be greeted by "Good heavens man, don't talk about fresh orders. Our shelves are simply piled high with unsold goods for which there is a diminishing demand on the part of the usual customer."
I think I ought to say that when I explained the purpose of my inquiry this manufacturer said, "For heaven's sake, don't try to persuade the Committee that a 5 per cent. Purchase Tax is the real burden of our trouble. Do not let it be suggested"—and I am not suggesting it for the moment—"that removal of the tax will ease our problem to more than a very slight extent." He also said that the only solution he could see for his industry—and he said this with some expletives which I had better not repeat—was a quick and radical change of Government.
That perhaps is not strictly relevant to the Amendment, but I shall not be deterred on that account from addressing myself to the subject of providing some little elleviation, as I hope it would be, by securing exemption in this regard for these categories of goods.
Looking wider, one cannot help but observe that the examples I have chosen from my constituency are the common experience throughout all branches of the clothing and boot and shoe industry, for I turned to the Ministry of Labour Gazette and discovered that in the twelve months ended February this year, the latest figures available, there has been a decline of 19,000 employees in the clothing industry, which represents a loss of nearly 3 per cent. All the indications are that this process of decline is continuing, for there was a continuing sharp decline to an even greater degree in the last month of the period for which the figures account.
This is to be found true in respect of every branch of the industry—tailoring, dressmaking, overalls, shirts, hats, boots and shoes. All reflect the same slackening of demand, which, of course, is a reflection of the general shortage of money, the tightness of money, the reluctance of people now on short time or unemployed, or who have lost their overtime or who apprehend that they may be among those who suffer in that way before long, who are holding back on their purchases and thus causing a growing decline in these important industries.
From the total of approximately 450,000 operatives for whom returns were made to the Ministry of Labour, one discovers that nearly 18,000 of them, or 4 per cent. of the total, are now working short time in these industries, and in the boot and shoe industry the position is even worse, where there is a figure of about 10 per cent. short time. Again this is reflected, and is likely to go on being reflected to an increasing degree, in the textile industry, where about 4½ per cent. decline of employment is to be found in the same period and there is a similar percentage of short-time working in the various textile industries as a whole.
I am not suggesting for one moment that the removal of this 5 per cent. Purchase Tax would alone solve the problem of the recession of the industry.


I am saying, however, that in the time of need of such an industry it would be a justifiable helping hand. If the Chancellor really wants to make a substantial start in the process towards a gradual modification of the Purchase Tax, with the hope of its eventual elimination, which appears to be the common desire of most hon. Members of this Committee, at some stage we shall have to start making wholesale exemption. I hope, therefore, that the right hon. Gentleman is persuaded that his ultimate purpose and the immediate need can be served by acceding to these Amendments.

Miss Alice Bacon: In supporting this Amendment, I want to reiterate what has been said by my hon. Friend the Member for Walthamstow, West (Mr. Redhead). There is a good case for removing the tax completely from these garments and other items. If we look back over the past few years at the history of the Purchase Tax on clothes, we remember that there was a time, even after the war, when certain cheaper and minimum priced clothes were not taxed at all. It was only when a general tax of 5 per cent. was imposed on all garments that cheaper ones were taxed, and this goes for many other goods as well. Therefore, the majority of lower-paid workers are today in a worse position as regards the payment of Purchase Tax on these necessary articles than they were some years ago, just after the war.
I have a particular constituency interest in this matter, especially in the tax on garments made of wool, because my constituency contains some big clothing factories, some whose names are household words throughout the country. Indeed, many hon. Members of this Committee may be wearing today garments made in the factories in my constituency. I would like to draw the attention of the Chancellor to what I regard as an anomaly in his present Budget which is rather misleading to the country. The right hon. Gentleman made great play in his Budget speech about the fact that he intended to remove the tax from wool cloth. That will be completely ineffective if, at the same time, tax remains on garments made from wool cloth.
Only last weekend I asked a manufacturer of cloth what proportion of wool cloth he estimated went into factories to be made into clothes, and what

proportion he estimated found its way into shops to be sold by the yard. He estimated that 99 per cent. of the wool cloth he manufactured found its way into factories to be made up into clothing which would then be chargeable for Purchase Tax purposes, and that only 1 per cent. of his cloth would find its way into shops to be sold by the yard. In other words, the great concession made for wool cloth in the Budget statement applies only to about 1 per cent. of the woollen cloth which is manufactured in this country. The Chancellor should realise, therefore, that he has done nothing for the wool trade as long as he keeps the Purchase Tax on clothing.
I know that the right hon. Gentleman will say that this has brought wool into line with cotton, but by this Amendment we hope that all Purchase Tax will be removed from all garments, whether they are made of cotton, wool, or anything else. There is, however, this slight difference, that the Chancellor's concession was more of a concession to cotton than wool, because so much more cotton finds its way into the shops to be sold by the yard.

8.15 p.m.

Mr. Amory: Would the hon. Lady be good enough to allow me to interrupt, as I would like this matter kept in perspective? I do not think that I made a big business of this removal of the 10 per cent. rate on wool cloth. I have looked up what I said:
Tax will be lifted altogether from wool cloth, now chargeable at 10 per cent., but clothing made from such cloth will, like other clothing, bear tax at 5 per cent."—[OFFICIAL REPORT, 15th April, 1958; Vol. 586, c. 72.]

Miss Bacon: It may be that the right hon. Gentleman was being a little more honest than were some of the accounts which I read in some newspapers, giving credit to his back benchers for "pulling off" the great feat of reducing Purchase Tax on wool cloth. Although it was a greater concession to cotton than to wool, because so much more cotton is sold by the yard, the right hon. Gentleman has not really encouraged housewives to buy either cotton or wool by the yard to make into garments, in retaining a 30 per cent. tax on sewing machines. Apart from that, however, I feel there is a very good case for taking off this Purchase Tax.
As my hon. Friend has said, there are fewer people engaged in the clothing trade and many fewer employed in the boot and shoe industry and I feel that the time has come when this tax could be lifted from these necessary articles. With the ever-growing increase in the cost of living, now is the time for the Chancellor of the Exchequer to make a gesture, particularly to lower-paid workers, by taking Purchase Tax from something which is so necessary a part of their weekly household bills.

Mr. F. A. Burden: Again, one finds oneself on much common grounds with the hon. Gentleman the Member for Walthamstow, West (Mr. Redhead) and the hon. Lady who has just resumed her seat; and in view of my very close association with the hon. Member for Walthamstow, West at the last Election, when I was fortunate and he was not—and I was very happy to see him returned to the House—one would expect that his arguments in presenting his case would be closely reasoned and very moderate.
I believe that all of us here can say that we would all greatly welcome the removal of Purchase Tax from all clothing. As is customary on these occasions, I must declare an interest, because I am engaged in the manufacture of clothing. Although I would agree with a great deal of what the hon. Gentleman and the hon. Lady have said, I feel that in one or two cases they were a little misleading. I know that there has been a marked decline in the purchase in the shops, as well as in the manufacture, of clothing during the past few weeks and particularly during the spring, when it was expected that there would be a very good selling period for the trade.
I am glad that the hon. Gentleman, in his eminently fair way, made the point that that was certainly not due entirely nor even to any great degree to the fact that those garments bear 5 per cent. Purchase Tax; because, after all, tax is not levied on the sale price of the article. It is levied on the cost price less discount. So a garment costing the retailer £6 has first removed from it the discount shown, and the Purchase Tax is on the cost less that discount. On the garment costing £6, therefore, it is in fact less than 6s. on the selling price to the retail purchaser.
I believe that we are quite right in saying that that charge does not make any enormous difference to the sales of articles. It would really be quite unrealistic to say that it does. All of us would like to see it removed, for every little helps; and also, of course, it would assist in simplifying work considerably—and thus cutting costs—in counting houses; but I believe that the decline during this particular season is due much more to the inclement weather.

Mr. Frank Allaun: Mr. Frank Allaun (Salford, East)indicated dissent.

Mr. Burden: The hon. Member for Salford, East (Mr. Allaun) shakes his head, but I am in touch with the trade every day. I, alas, have suffered from it. Easter came very early and the weather was very cold. Usually, Easter stimulates trade, particularly the ladies' fashion trade. If it is warm, they buy garments in which to go out at Easter. That is the time when they come out in their spring finery; but a very early Easter, with cold weather, means that they do nothing of the sort.
In addition, there has been a very radical fashion change, and when fashions change as radically as they have changed this year ladies often take more than a few weeks deciding whether or not the new fashion will suit them. That, also, has been one of the reasons for the cutback in sales this year. A very good assessment of whether or not general trade has been good can be made from store figures. I believe that the figures of sales in stores will show that sales, and especially the spring trade, has been very much down.
Equally, I am convinced that most of the stores, until last year, have constantly increased their turnover. I would also say that in the last two years, there has been a fining-off of profits and of prices on a great many garments. Prices have been coming down and people are getting better value than they got three, four or five years ago. That is all to the good.
One other thing which is happening, and which is hitting our trade harder than a lot of people realise—and I believe this is within the terms of this Amendment, because we are asking for Purchase Tax to be removed to stimulate trade—is the fact to which the hon. Gentleman referred, that many more goods than


before are being bought abroad. Buyers are going to the Continental markets and are implementing home products with those from other countries. Those pay the same rate of Purchase Tax, but those goods are not made here and do not give work in our factories. All those things should be taken into consideration.
Whatever may be said about the cut in Purchase Tax on wool cloth, it was welcomed by the trade. There was agitation for it. I believe that we are not on party ground here. Hon. Gentlemen opposite and my hon. Friends on this side, like myself, pressed for the removal of Purchase Tax from wool cloth. Yorkshire manufacturers were delighted when the tax came off; but, again, one can simplify these things.
The hon. Lady quoted a manufacturer who had told her that 99 per cent. of the cloth that he manufactured went into factories to be made into clothes. That may be so in his case, but I believe that that was over-simplifying the matter. I am sure that in many cases the ratio of cloth going to the shops compared with that going to the factories is much higher than 1 per cent. to the shops. It is difficult to assess. If the hon. Lady does not agree, I will say mainly so. We should be very unwise to take an isolated case as giving a true picture for the whole industry.

Miss Bacon: Does the hon. Member not know a man who has bought material to have it made into a suit?

Mr. Burden: I do that myself. I go to the cloth man and buy the cloth, and then have a little tailor make it up.

Miss Bacon: Surely the little tailor who makes it up is charged Purchase Tax?

Mr. Burden: Not if his turnover is not more than £500 a year, and that is up to the Purchase Tax people to assess.
On the other hand, when the hon. Lady is dealing with men's cloth she is dealing with a highly particularised garment, a man-tailored garment for a man. On the other hand, many ladies buy wool cloth in shops to make dresses—not suits or coats, although some of them make those, too.
Although I support the desire of hon. Members on both sides of the Committee

entirely to remove Purchase Tax wherever it can be removed, I do not think that all the difficulties of the trade, if they exist as strongly as the hon. Gentleman and the hon. Lady said—and I do not accept that—are due in the main to the 5 per cent. Purchase Tax. There are other reasons which must be taken into consideration.

Mr. Frank Allaun: I support the powerful arguments of my hon. Friends and I wish to add several others. The clothing industry is undergoing a severe depression which is not due to the weather as the hon. Member for Gillingham (Mr. Burden) suggested, because it started before Christmas. As the hon. Member knows, the Manchester-Salford area is a centre of the clothing industry and I am especially concerned with tailors and small firms.
I am informed by many of my friends that this has been the worst winter for their industry since before the war. Highly skilled craftsmen were out of work the whole winter, skilled craftsmen who have never been out of work before. So the depression is not due to the weather if it started before Christmas.

Mr. Burden: Orders are placed before Christmas, especially in the ladies' trade, for delivery in the spring. The incidence of employment should then be reasonably high. I agree with the hon. Member there, but I do not think that the conditions he described are general merely because one man has been out of employment. There may be other reasons, and one has to take the general picture.

Mr. Allaun: I assure the hon. Member that I was speaking not of only one man, but of hundreds of men in that position. The point I am making is that the depressed state of the clothing industry is due not to the weather but to a very different reason. Nor do I suggest, in all fairness to the Chancellor, that it is due to Purchase Tax. The depressed state of the clothing industry is entirely due to workpeople having less money in their pockets to buy clothes.

Mr. Cyril Osborne: I was on the T.V. programme "Under Fire" against a Lancashire audience and they attributed the depression not to Purchase Tax but to imports from Hong Kong.

Miss Bacon: That is cotton.

Mr. Victor Collins: I saw the broadcast of the hon. Member for Louth (Mr. Osborne) and noticed his discomfiture when his audience attributed their difficulties largely to the policy of the Government.

8.30 p.m.

Mr. Allaun: Because overtime in most other industries is ending and short-time is beginning, working men have less money in their pockets to spend on new suits or new overcoats. Consequently, the clothing industry is in a bad way. I repeat that I do not attribute the depression to Purchase Tax, but I do argue that if the 5 per cent. tax were removed, that would give a fillip to the clothing trade which would help it to recover, a fillip which it badly needs.
There is a remarkable fact which has not yet been brought out this evening. Previously, there was a 10 per cent. tax on a few hundred cloth manufactures. That has been replaced by a tax of 5 per cent. not on the cloth but on the total cost of the suit—which is roughly the same because of the labour and so on involved in making up the suit. The astonishing thing is that instead of levying the tax on a few hundred cloth merchants, the tax is now being levied on tens of thousands of small firms.
That is no exaggeration. The Chancellor must agree that there are many thousands, and in my view tens of thousands, of firms which are now involved. It is only common sense to say that there are many thousands of small tailoring and clothing firms in the country and I am told by my constituents that tax officers have visited those firms. I do not know how many officials are employed on the work, but I am certain that more will have to be employed, because there are so many tailors to visit.

Mr. Burden: The tax is not levied on the small firms, the wholesalers, the manufacturers, or the tailors. The tax is collected by those people from the retailers at the time that the goods are put into the hands of the retailers. In fact, it is only three months later that the tax is paid to the tax authorities..

Mr. Allaun: That does not alter the fact that tax officers are visiting small tailoring firms all over the country and

asking to see their accounts. That is undeniable because I have seen it happen. I must admit that the accounting systems of some of these small firms are probably not as good——

Mr. Osborne: Those officers may be going to those establishments for purposes other than Purchase Tax. There are matters other than Purchase Tax which interest the Inland Revenue.

Mr. Allaun: The visits to which I am referring are visits purely to obtain the accounts of the Purchase Tax which these small firms have to pay. This letter I am holding, which has been supplied by my hon. Friends, will, I think, confirm the point I am making, that many of these small firms have accountancy systems which leave something to be desired.
It may be argued that they must keep proper accounts in order to pay Income Tax, but I can assure the Committee that the accounts which small firms are now required to keep are far more difficult, complicated and detailed than those needed to ascertain what they should pay in Income Tax. They will have to distinguish between certain suits made from their own material and suits made from material supplied by customers. This needs a very complicated accountancy system which small firms do not have.
Previously there was an exemption limit. Firms with a turnover of under approximately £2,000 a year did not need to be registered for Purchase Tax considerations. This limit has been reduced to a £500 a year turnover. Hon. Members will agree that a turnover of £500 a year is so small that every firm in the country is involved. Any firm with an annual turnover of less than £500 is not making a living, so that the smallest firms are now involved and tax officials are having to visit these firms to ascertain——

Mr. Burden: This has been the position ever since Purchase Tax was introduced.

Mr. Allaun: Mr. Allaunindicated dissent.

Mr. Burden: The hon. Gentleman shakes his head, but I can assure him that it is so. Any firm with a turnover of more than £500 a year is subject to Purchase Tax. That has always been the case. The tax collectors pay their three-monthly visits to see exactly what the


owner of the firm has to do, and every three months the collectors tot up the figures. It is no more arduous or difficult for them or for the firms than it was two, three or four years ago.

Mr. Allaun: There has been a change. The limit is now £500.

The Temporary Chairman (Sir Norman Hulbert): Order. I must remind the Committee that this Amendment deals with the variation of tax on some garments. We cannot discuss the whole mechanics of Purchase Tax collection.

Mr. Allaun: Certainly not, Sir Norman. I will go on to another point—the staggering anomalies which have been introduced which will lead to all kinds of evasion of quite a serious nature.
If the right hon. Gentleman goes to a firm and buys his own cloth and then takes that cloth to his tailor, no tax will be paid on the suit made from that cloth. It appears to me a striking anomaly that on some suits there is no tax. Surely this is a fantastic situation. I see that the Chancellor is nodding his head and that he agrees that that is the position.
If a retail outfitter buys cloth and sends it out to be made up, no Purchase Tax is paid on the suits up to a limit of £500. That is a second way of avoiding tax. Finally, there is the general argument of the undesirability of paying Purchase Tax on a necessity. In a country like ours, with a climate such as ours, even the right hon. Gentleman will admit that clothing is a necessity.

Mrs. Jean Mann: I wish to draw attention to something new which really should not be introduced. I refer to headgear, in Group 3. The Appendix to Notice No. 78N states that
The exemption for babies' headgear no longer applies to articles made of fur skin. Babies' headgear which is made wholly or partly of rabbit or woolled sheep or lambskin but no other fur or which is merely trimmed with fur skin, is not, however, affected.
Last year articles suitable only for babies were exempt. For the past twelve or thirteen years we have striven to keep all children's goods free from Purchase Tax, and that included babies' goods. Now, for the first time, there is a new element creeping in. In the new revision of the tax Schedule it is clearly stated

that exemption for babies' headgear no longer applies to articles made of fur skin. In Scotland, fur coats, that is, skin fur coats, are a necessity. Fur skin for babies' headgear is also a necessity, for babies in Scotland, at any rate, and probably that applies to the north of England, where the climate is cold, too.
I merely wish to point out to the Chancellor that he is introducing something that has never been introduced during the past thirteen years. There cannot be very much in it from the Chancellor's point of view, but if I and others do not make our protest, shall we be confronted with the situation next year that the tax will be extended and be told by the Chancellor, "I do not wish to discriminate," as we were told in regard to safety devices, which the Labour Government kept free of tax for so long?
I appeal to the right hon. Gentleman to grant this concession. After all, there was a big enough hullabaloo about the tax on miners' protective helmets, and quite properly so, and that tax was introduced for the first time. A very big principle is involved, and I appeal to the Chancellor to keep babies' and children's clothing and hats and shoes free from Purchase Tax.

Mr. Douglas Glover: I should like to reinforce the remarks of the hon. Lady the Member for Coat-bridge and Airdrie (Mrs. Mann). I see a great danger in making this one exception, particularly on children's clothing. I believe that it is a very wise principle that we have kept children's clothing of all sorts free of Purchase Tax during the last 15 years. It is so easy, particularly with taxation, once we introduce or break a principle to extend that in future years. The amount of tax which will be raised on this very narrow item on which tax is to be imposed is infinitesimal and I hope that before the Report stage my right hon. Friend will have another look at it.
The main point which I rise to speak about is whether my right hon. Friend, in considering Purchase Tax on clothing, the bulk of which is at the rate of 5 per cent., will take the opportunity in this Finance Bill to look into the question of uplift. I do not know if all hon. Members are aware of what is uplift. When a manufacturer is selling in large quantities he has to uplift his price to bring


it into the wholesale price at which the goods are sold to shopkeepers for the purpose of calculating tax. That was a perfectly sensible thing when Purchase Tax was at the rate of 25 per cent. But does my right hon. Friend realise the amount of work that is involved and the negligible amount of difference that it makes in fact?
Let me give the example of a garment priced at £1. It has to be uplifted 10 per cent., which is 2s., and the increased tax at 5 per cent. is paid on that 2s. so that the difference in price, after all the calculation and clerical work that has to be gone into by the manufacturer, wholesaler and retailer, brings into the Treasury an extra 2d. in the £. It really is not worth the effort. It does not make any difference whatever to the selling price. It does not today protect the small shopkeeper against the competition of the chain stores. It is an administrative anachronism which creates wasteful expenditure, waste of time, and does not achieve any useful purpose. I hope that my right hon. Friend will take the opportunity to look into this point when he is considering these Amendments.

8.45 p.m.

Mr. Collins: I support what has just been said by the hon. Member for Ormskirk (Mr. Glover) on the subject of uplift, which wastes an enormous amount of time. These are small calculations which add about 50 per cent. to the time taken by the invoice clerk to calculate the amount of tax due, for very small aggregate benefits, particularly when calculating on a 5 per cent. Purchase Tax. I suggest that the authorities have been either unenterprising or complacent in this matter.
In my association, we had a similar difficulty with the Customs and Excise about three or four years ago. We were then uplifting by 5 per cent. and the Department suggested that we should uplift by 10 per cent. We discussed the matter for months and finally we told the Department that we were not going to uplift at all. Three months later, the Department wrote and said that it entirely agreed with our decision. We have not uplifted since. I make this suggestion as one that might be followed, but I emphasise that the decision followed upon a series of careful discussions. I

am not suggesting that it should be done abruptly but that reasoned arguments should be put forward. Then comes the time for decision.
I apologise if I am intervening without having heard the whole of the debate. That sort of thing happens to all of us sometimes, and we all regret it. I am intervening to reinforce some of the remarks of my hon. Friend the Member for Salford, East (Mr. Frank Allaun) and to assure the Chancellor of the Exchequer that this problem is by no means confined to the North or to provincial areas.
As is well known, my division, Shoreditch and Finsbury, produces more furniture than any other area in the country. We also produce a great deal of clothing. A lot of my constituents are in the clothing trade, and particularly in the mantle and costume branch. There we have the main branch of the National Union of Tailors and Garment Workers.
It is beyond dispute that there is a severe depression in the industry, not of very recent origin. Seven or eight months ago I was raising with the Minister of Labour the unemployment in this industry, which was very severe. I was receiving deputations at the House. A number of important factories closed down temporarily, and one appeared to have closed permanently. It has since reopened, but it is carrying on under conditions of extreme difficulty.
There is a recession in that section of the mantle and costume trade which they call "ladies' outerwear". My information is that the spring season, on which it built its hopes, orders for which are placed prior to Christmas, well in advance, has collapsed utterly on the industry, which now has many unsold garments. It is now waiting for the autumn season, for which customers should be ordering now. I am informed that factories in places like South Wales and Halifax have temporarily closed down. The South Wales factories were among those which were put into Development Areas to bring new industries. Unfortunately, they have had temporarily to close down.
My information is that formerly orders for the autumn season were placed in May and June, but those orders have not been placed. They are not expected


to be placed until September, and that will be the lot. Previously, orders were placed in May and June and repeats case in September, but the trade is so depressed that it will not get orders until September.

Mr. Burden: I am sure the hon. Member would not wish to give a false impression, but he is not quite right when he says that orders are not being placed. Orders are being placed now, and will be in June. If they were not placed until September they would not be in time for the season, but May is not out yet. There has been a tendency for manufacturers to get earlier every year, and the general buying time is from now until the middle of June.

Mr. Collins: I am quite prepared to accept what the hon. Member says, as his knowledge is greater and more intimate than mine, but my information came from the Secretary of the National Union of Tailors and Garment Workers as recently as yesterday. I am in constant touch and, because I like to be sure of my references, I checked them yesterday. Unfortunately, from my experience only last week, this seems to be the case. My factory is close to a labour exchange, and I have noted that the labour exchanges in Shoreditch, Hackney and Stepney have had so many men and women signing on for employment that they had to queue for hours. That seems sufficient evidence that orders are not being place in sufficient quantities.
It is not much comfort to men and women who are unemployed to say, "May is not out yet". The answer may be "I am—I am out of work". According to my information, from the same source—which is fairly reliable, because, after all, the people best able to say whether there are many out of work or on short time are these people—the situation is the toughest they have had since the early 'thirties.

Mr. Burden: Mr. Burdenindicated assent.

Mr. Collins: I am glad to see that the hon. Member for Gillingham (Mr. Burden) nods his head in assent. My hon. Friend the Member for Salford, East rightly said that this situation does not arise simply because of the 5 per cent. Purchase Tax. I am sure the Financial Secretary will agree with that. I want the hon. Gentleman to know that

the position in the tailoring industry is becoming more and more alarming. More and more people are signing on at the employment exchanges, and at present I do not know of a single firm in London which is not on short time.
Reference has been made to small tailors. I quite understand the point which was made about minimum turnover for the purpose of registration for Purchase Tax. Equity is met when registration for Purchase Tax is at a very low turnover point, because many difficulties and evasions arise when it is at a higher level. If there is a lawful tax, I do not think it should be competent for anyone to have the means of evading it. What I am concerned about is that there is a tax at all.
The Chancellor rightly eschews taxes on food. Food must come first, but I should think that clothing must come a very close second. We should not be in so much trouble if we went without food as if we went about the streets without clothing. Clothing is an absolute essential, and the argument which the right hon. Gentleman has rightly adduced against taxes on food could be put with almost equal force against taxes on clothing.
I have a very large number of small master tailors in my constituency. Many of them are still masters only in the sense that they are working and selling the products of their own labour. They are not sufficiently affluent or have not sufficient business any longer to employ people. They are in considerable difficulties. I ask the Chancellor to look at this matter seriously. I do not expect him to come to the rescue of every industry which is in distress, but there is a case for the removal of this 5 per cent. tax. When he considers the Amendment, I ask him to let us know what the volume of this tax on garments is and whether, with all the expense of collection——

Mr. Simon: I did not catch what the hon. Member said. Did he say the volume of the tax, the revenue of the tax?

Mr. Collins: That was what I hoped the Chancellor would furnish—the volume of the tax derived from garments. I believe that several Amendments are under consideration, but I was


thinking of garments in particular, and the tax is only 5 per cent. I am asking him to weigh that revenue against the difficulties and costs of collection, and to weigh it also against the possibility that there are costs in relation to unemployment and distress which cannot be measured in terms of pounds, shillings and pence. I hope he will answer the question, is it worth it? I very much doubt whether he can say yes. If he cannot, I hope he will accept the Amendment and remove the tax.

Mr. Tom Brown: I will not detain the Committee for more than a few minutes, but there appears to be some misunderstanding, not in this Chamber, but in the country, concerning the reduction of Purchase Tax on woollen cloth.
I have received several letters and have had several interviews with people concerning the question whether the finished article made of woollen cloth should have the Purchase Tax of 10 per cent. reduced. The Chancellor has quoted from a speech he made and has intimated that the Purchase Tax of 5 per cent. upon finished garments remains as it was before the Budget. Is that true? Maybe I am getting confused, too, but I hope the Financial Secretary will explain the matter, because at the moment the small tailor or outfitter is being challenged that he is not carrying out the Chancellor's promise in his Budget statement. Therefore, I think the whole thing should be clarified. Heaven knows, it is complicated and confusing enough.

Mr. Glover: Will the hon. Gentleman allow me? I have some experience of this matter, because I have been in this trade all my life. Woollen dresses have always incurred a tax of 5 per cent., and there is no alteration in the Budget of the Purchase Tax paid on these dresses. It is exactly the same as it was before the Budget.

Mr. Brown: I do not dispute that statement at all, but what I am trying to ensure is that people in the country shall understand what is the exact position. I know that the finished garment has carried a 5 per cent. Purchase Tax since the last Budget, if not before, but now the Chancellor has made a change. This change is applied only to woollen cloth,

and he has reduced the rate of Purchase Tax by 10 per cent. There is some confusion here. [HON. MEMBERS: "No."] It is undeniable, because representations have been made to me, both verbally and by letter, and I want to read part of a letter which I have received from an outfitter who is voicing the opinions of his colleagues in the trade in the following terms:
Dear Sir, I wish to draw your attention to the deceit in the announcement by the Chancellor during his Budget proposals about the abolition of the Purchase Tax on wool cloth. Tax has in fact been dropped, but the deceit lies in the fact that extra tax has been placed upon the making of articles from it.

Hon. Members: No.

Mr. Brown: Evidently, back benchers on the Government side are also a little bit confused. I am reading from a letter illustrating a point which I want the Chancellor or the Financial Secretary to clear up when replying to the debate.
The writer goes on to say:
As a result a suit remains virtually the same price as it does before Budget day. But my customers are of the opinion that I am not passing on to them the 10 per cent. reduction announced on 15th April.
We want a categorical assurance from either the Chancellor or the Financial Secretary that though there is a change in the Purchase Tax on woollen cloth, the 5 per cent. Purchase Tax remains on the finished article.

9.0 p.m.

Mrs. White: We have had an important debate on an industry that is passing through a very difficult time, and there are several points on which I should like a reply from the Treasury spokesman.
My hon. Friend the Member for Walthamstow, West (Mr. Redhead), who moved the Amendment with, as usual, great lucidity, said that we recognise that the fact that there is 5 per cent. Purchase Tax on garments of all descriptions, including some of the minor items mentioned in some of the other Amendments, is not the whole explanation of the difficulties of the trade. Rather to my surprise, hon. Members opposite cheered that. They have nothing whatever on which to congratulate themselves if the general economic state of the country is such that the clothing industry is in serious difficulties, and I think that the experience of all of us confirms that that is so.
I must plead a constituency interest in this trade, at an earlier stage of manufacture. In my constituency, I have four very large rayon factories. The material that they make is used, in part, for furnishing fabrics, which we are not now discussing, but a considerable proportion is used for making rayon cloth for lining women's outerwear, as it is called in the trade. Owing to the very sharp decline in that section of the trade, one factory, employing nearly 2,000 workers, has closed entirely, another very large factory is closed for one week out of every gve, and only recently I heard that a number of women and old-age pensioners were being put off from a third factory owing, again, to recession in the industry.
We have had confirmation from all parts of the Committee that the clothing industry is in a very difficult position. The hon. Member for Gillingham (Mr. Burden) made great play of our chilly weather, but it is not the first time that we have had a cold spring, or an early Easter. He also said that there had been a radical change in fashion. My experience is that if there has been a change in fashion most women try to keep it, and are more encouraged to buy new garments, but even if some women are somewhat more conservative-minded and take longer to follow the trapeze line, or even the kangaroo line, which is exemplified by one of the hon. Ladies in the House——

Mr. Glover: If we are to enter upon a dissertation on fashion, surely the hon. Lady is aware that a coat is nearly always fully lined and takes a lot of material, but that when the ladies wear suits only the coat is lined. Lining is not used in the skirt, so she must know that, as a result, not nearly so much lining is used.

Mrs. White: With great respect to the hon. Member for Ormskirk (Mr. Glover), who, I know, has some experience of this trade, our women have worn suits for many years. In fact, the Englishwoman in a tailor-made suit has been a characteristic of this country for as long as any of us can remember and, as the hon. Member for Gillingham has pointed out, our climate is still sufficiently cold for it to be necessary for women to wear a top coat as well as a suit for the greater part of the year. I cannot think that that argument has any substance in it.
The point of the argument is that for one reason or another the clothing trades are in very sharp decline. That being so, it is not unreasonable that we should ask the Chancellor to consider whether in those circumstances it is advisable to retain even a relatively small tax on the industry. There are, of course, other arguments that one can adduce. My hon. Friend the Member for Leeds, South-East (Miss Bacon) rightly reminded us that it is only a relatively recent development that there should be any tax at all on the kind of garments which used to be in the Utility ranges; in other words, the more necessary garments for everyone.
It is true that children's clothing has been exempt. The hon. Member for Ormskirk and my hon. Friend the Member for Coatbridge and Airdrie (Mrs. Mann) are right to protest that—in a very minor sector, I admit—children's wear has been brought back into the scope of the tax. I will not discuss the question of baby minks at this stage. It is a minor matter of principle, but it is right that we should protest that the Chancellor has decided to tax even one small item of children's clothing for what must be an infinitesimal amount of revenue.
We have had representations made about the foolishness of continuing uplift in the industry. I will be frank with the Committee. I have always found it extraordinary difficult to understand uplift, at least as it applies to trade. Having been brought up as a good Welsh Calvinist, uplift in one sense is second nature to me, but I find the technical matter of uplift always a little difficult to follow. I have no doubt that it is child's play to the Financial Secretary. Therefore, I am convinced that he will have listened with very great attention to the argument put forward by the hon. Member for Ormskirk and my hon. Friend the Member for Shoreditch and Finsbury, who have great experience in these matters.
In the light of the Chancellor's streamlining policy, if—as we are assured by the hon. Gentlemen who have considerable experience in trade, and also by the hon. Member for Gillingham, who, I gather, entirely endorses this—the matter of uplift when we have such a low rate of tax is simply not worth the time and energy spent both by the trade and the Customs and Excise in working it out,


checking the sums, and so on, surely this is a very good opportunity for a concession.
Finally, we must refer to wool cloth and the garments made therefrom. It is perfectly clear from the reports that we have been receiving from both Lancashire and Yorkshire, and also from the London area—in other words, from all parts of the country where there are major manufacturing districts for clothing, particularly men's clothing—the change has caused much confusion.
The Chancellor said—I grant him this; he is justified in having made the intervention from his personal point of view—that he made a little more of some of his other concessions than he did of the one in respect of wool cloth. But that did not apply to his supporters. There was a very eloquent intervention by the hon. Member for Shipley (Mr. Hirst), who most warmly congratulated his right hon. Friend on this "great advance". Therefore, the Chancellor cannot complain if we quote the representations that we have had on the matter. Tailors are finding it extremely difficult to explain to their customers the fact that men's suits still cost the same although the Chancellor has made the concession in respect of wool cloth.
There is also the difference now in the method of collection. I hope that the Financial Secretary will now make it crystal clear to everyone concerned, including the constituents of my hon. Friends the Members for Salford, East (Mr. Frank Allaun) and Ince (Mr. T. Brown), exactly where they stand.
I have a letter here from a tailor in Lancashire. He complains about the difficulty of explaining to his customers exactly what happens, and he adds:
Another aspect is the extra work involved, both to the thousands of small shopkeepers like myself who have to become tax collectors and to the Customs and Excise Department. On Wednesday an officer from the Customs and Excise spent two hours with me explaining the new part I have to play in collecting this tax. He said he would have to spend a similar amount of time with all the small shops in his area. This plus a quarterly inspection of the books of small shopkeepers will cost the country many thousands of pounds.
I quote that because it comes from somebody who has written to us and is representative of small tailors in Lancashire generally.
It is most necessary that—for the benefit of the public—we should be clearly told exactly where these people stand in the matter of the prices of the articles. It would be as well that we should have a defence, if it is possible to have one, of this new arrangement of tax collection, which will lead to a great deal of work for a number of small people.
Then there is the anomaly, which has been pointed out by my hon. Friends, that if one purchases cloth and takes it to one's tailor one pays nothing in tax, whereas if one buys a suit already made one pays tax. That is surely the sort of anomaly which must distress the Chancellor of the Exchequer. I should have thought he would have wished to avoid it if possible.
These are the main arguments in support of these Amendments, though there are others we may yet discuss, particularly about footwear. I myself have always felt it wrong to tax footwear. Since footwear is so important to health, it really ought not to be taxed at all. However, I do not wish to detain the Committee any longer, as we are all anxious to hear the explanation of the Financial Secretary.

Mr. Simon: This has been, at any rate for me, a very interesting debate, because we have had a good deal of expertise. My hon. Friend the Member for Gillingham (Mr. Burden) speaks with great authority of one of the trades we have been discussing, and a number of other hon. Gentlemen, and the hon. Lady the Member for Flint, East (Mrs. White), have a very close constituency interest in this matter. My hon. Friend the Member for Ormskirk (Mr. Glover) has spent most of his life in the industry.
Both the hon. Lady the Member for Flint, East and my hon. Friend the Member for Gillingham quite rightly paid a tribute to the hon. Gentleman the Member for Walthamstow, West (Mr. Redhead) on his introduction of this debate. My hon. Friend actually called it a closely reasoned and very moderate speech. I thought it was in its expression, but on the other hand I could not help remarking that the hon. Gentleman said that his purpose in moving the Amendment was the gradual elimination of the Purchase Tax on these articles. For a gradual elimination this is not a


bad first bite. It amounts to very nearly £50 million on all the articles concerned.
The hon. Gentleman the Member for Shoreditch and Finsbury (Mr. Collins) asked me for a breakdown of cost. The amount involved in the Amendment immediately before us relating to garments is £35½ million. The amount on footwear, headgear and gloves comes in total to £9½ million. The amount on haberdashery is £1½ million. I can break these figures down if it is wished.

9.15 p.m.

Mr. Redhead: Will the hon. and learned Gentleman state whether, in arriving at these figures, due allowance has been taken of the fact that the revenue yield under these headings has hitherto included the tax revenue on fur items, which have been taxed at a much higher rate?

Mr. Simon: No. The loss of revenue that I have given is that which would be involved in the acceptance of the Amendments. Fur has been taxed under a different part of the Schedule.

Mr. H. Wilson: I think that the hon. and learned Gentleman referred to the total revenue which would be lost by the acceptance of the Amendments. Am I right in thinking that he is referring not to the single Amendment which has been moved, but to all the Amendments we are taking together?

Mr. Simon: Yes, that is right. The amount involved in all the Amendments is £46½ million, but on the main Amendment dealing with garments the amount is £35½ million. I gave the further breakdown, to some extent.
The Committee will appreciate that, since this sort of figure is concerned, my right hon. Friend will be unable to accept the Amendment. But the debate gives us a chance, first, to look at the clothing industry and, second, to deal with the point raised specifically by the hon. Member for Ince (Mr. T. Brown) and the hon. Member for Flint, East on the change in the method of collection of the tax, or the remission of the tax, on wool clothing.
The hon. Member for Leeds, South-East (Miss Bacon) said, quite correctly, that during the war there was a differential in the tax on clothing. Utility clothing was exempt, and later roughly

the equivalent of Utility clothing was exempt under the D scheme.

Mr. Wilson: The hon. and learned Gentleman was not involved in the debates we had at that time, but if he will read the debates on the Bill, which was introduced by the Lord Privy Seal, he will find that we spent two nights running on the subject—which I hope will not establish a precedent which the Chancellor wants to follow. As my hon. Friend the Member for Leeds, South-East will probably remember, during those debates we moved between 80 and 90 Amendments, the purpose of each of which was to set the D line at that level which would exempt all clothing of up to approximately the Utility standard. In every case our Amendments were defeated—except in the case of furnishing fabrics, where the question was considered. But we were defeated on every other occasion, because the Government insisted on fixing the D line at a point lower than the top Utility level.

Mr. Simon: I am obliged to the right hon. Gentleman for that correction, but I was merely trying to make the point that there was a differential in clothing, and that it was removed in 1955, when a flat 5 per cent. tax on all clothing was introduced which brought in roughly the same amount of revenue as the previous tax. Whatever else may be said, that undoubtedly obviated many anomalies and a number of distortions in trade which the previous incidence of the tax had caused.

Mr. Wilson: Since the hon. and learned Member has been giving the figures of tax revenue, will he now state the total amount of revenue from this group of items, as compared with the total amount obtained during the period, first, of the D scheme and, secondly, the Utility scheme?

Mr. Simon: I am sorry; I cannot do that without notice, but I shall try to obtain that information and give it to the right hon. Gentleman.
With all these changes in tax, I think the Committee will agree that clothing prices have remained remarkably stable. They have shown an almost unique stability over the last decade or so—certainly over the last seven years. That suggests that this has always been a highly competitive industry. That is the


first thing one must look at in discussing the general state of the industry. The second is the point made by the hon. Member for Shoreditch and Finsbury, that the recession is not of recent origin. When one considers that together with the great increase in purchasing power which took place last year it will be seen that in considering this recession one must look to other factors than those which may be operating in some other parts of the economy.
The next point, which was generally agreed in all parts of the Committee, especially by those who spoke with particular authority about the industry, is that whatever recession or short working there may be, Purchase Tax is not really an operative factor. I know that it is perfectly arguable to say that Purchase Tax should nevertheless be removed, but it was nevertheless agreed by every hon. Member who spoke on this matter that Purchase Tax was not even an operative factor.
The other point which I should like to make is that not only was consumer expenditure high last year—indeed, higher than it had been before—but, as my right hon. Friend estimated in his Budget statement, consumer expenditure is likely to keep up this year. This leads me to suggest that one must look elsewhere than to the fall in consumer spending for such ills as are at the moment afflicting the industry. It may be that this industry, originally competitive, is now subject to even more acute competition from outside the industry. There are competing attractions for the expenditure of the people who were probably restocking their wardrobes after the war.
It is against the background of these facts that I ask the Committee to view this tax: first, that the Purchase Tax is not an operative factor in such misfortunes as the industry is undergoing; and, second, that a number of the deep-lying causes of these misfortunes do not lie within the fiscal manipulation of this Committee of or the House but are to be found in alternative attractions to spending, such as television sets, which are still bought at an increasing rate, and record players and records, all big revenue producers which for that very reason are still taxed at the higher rate of 60 per cent.

Mr. Jay: Could the hon. and learned Gentleman's argument not be used with almost equally exact truth about the film industry, which has become depressed not mainly because of Entertainments Duty, but precisely because of this sort of competition? Have not the Government nevertheless accepted the argument for reducing the tax in order to assist the cinema industry?

Mr. Simon: So far as the cinema industry is concerned, I do not doubt that the right hon. Gentleman is correct. My right hon. Friend made that very point in his Budget statement. Certainly, one could not ascribe to the Entertainments Duty all the misfortunes of the cinema industry, because there were these alternative attractions, particularly television. Nevertheless, that can be seen to be a different case when one considers the difference in the rate of tax and the fact that the cinema was isolated in having to pay Entertainments Duty at that high rate. I am grateful, Sir Norman, to have been enabled to get away with that, and I hope that I have answered the right hon. Gentleman.
Having said that about the general background of the tax, and before answering some of the specific points made during the debate, I will try to answer what was said by the hon. Member for Ince and, in that connection, try to reply also to the points made by the hon. Member for Salford, East (Mr. Allaun) about the change in the tax on wool cloth. My right hon. Friend reminded the Committee of what he had said during the Budget debate, and I think that everyone accepted that as a perfectly fair and candid statement of the change which had taken place.
There is no change in the tax on clothing, either on suits or dresses. It remains at 5 per cent. Before the Budget, there was a tax on wool cloth of 10 per cent., whereas there was no such tax on cotton cloth or cloth made from artificial fibres. As I understand it, the change is this. What determines liability to tax is not merely the fact that the goods a person is selling are stated in the Purchase Tax Schedule to be liable to tax, but whether or not the person is registered.
What was done in the clothing trade was to register the manufacturer of the woollen cloth and to collect from him tax at 10 per cent. My right hon. Friend


reminds me that it is the manufacturer or the wholesaler. This being so, a tax at the wholesale level of 10 per cent. is roughly equivalent to a tax of 5 per cent. on the finished article at the retail outlet. Since the wool cloth was taxed at 10 per cent. at the wholesale or manufacturing point, it was quite unnecessary to register and collect the tax from the retailer. To have done so would have been to collect the tax twice.
My right hon. Friend received very strong representations from the wool industry, which said that it felt itself to be unfairly treated by what it regarded as a discrimination against it. Those concerned in the industry asked why wool cloth should be treated in this way and, uniquely, have to bear a tax of 10 per cent., whereas cotton cloth and cloth made from artificial fibres bore no such tax. It was found impossible to controvert those arguments. For that reason, my right hon. Friend made the change he did in his Budget statement and relieved the manufacturers of wool cloth from the 10 per cent. Purchase Tax, bringing them into line with the manufacturers of the other cloth. But, as he made quite clear at the time, that involved the corollary that the retail outlets then became registrable.

Mr. Glover: Will my hon. and learned Friend clear up one point, because it is very important? It is not the ordinary retailer but the bespoke tailor who is here concerned. If the impression goes out from here that my hon. and learned Friend is talking about the ordinary retailer, there will be a misapprehension. We are here concerned with the establishment where a person actually makes a suit on the premises.

Mr. Simon: I am very grateful to my hon. Friend; he is perfectly right. I was imprecise in my language. It is the bespoke tailor who now becomes registrable and the tax is to be collected from him. Otherwise, it would be grossly unfair on the big manufacturing tailor.
The hon. Member for Salford, East pointed out that this situation is likely to lead to evasion. I think that he is perfectly right. It was a decision that had to be balanced, but in view of the representations that we received from Yorkshire it was felt that that was a risk that ought to be taken. I assure the hon.
Gentleman that we have very much in mind the points that he put so lucidly and fairly, and if abuse is found to be developing there are measures that can be taken, and we shall step in.

Mr. Allaun: rose——

9.30 p.m.

The Temporary Chairman (Sir Norman Hulbert): The Question is——

Mr. H. Wilson: I understand that the Financial Secretary is giving way to my hon. Friend.

Mr. Simon: I am conscious of having spoken at some length. There are one or two small points with which I want to deal, but I was giving way to the hon. Member for Salford, East.

Mr. Allaun: I am much obliged to the hon. Gentleman. The question I wanted to ask is this. It is true that the Financial Secretary has dealt with the question of evasion, but he has not answered the criticism that instead of his tax officers having to visit a few hundred cloth manufacturers and merchants they will now have to visit tens of thousands of small firms, which will surely involve the country in much additional expenditure in collecting the tax.

Mr. Simon: I was proposing to deal with that point next; I had it in mind. In the first place, the hon. Gentleman is misinformed when he says that there are tens of thousands of bespoke tailors concerned. Considering those who are exempt, I am told that there is nothing like so great a number. I cannot give a precise number, but it is certainly well under 10,000, according to my information. What is happening there is no different from what has been happening ever since, I think, 1955 in the sphere of cotton and artificial rayons.
May I finally deal with one or two minor points which were raised in the course of the debate? The hon. Member for Coatbridge and Airdrie (Mrs. Mann) referred to children's headgear. She said that fur skin is a necessity for Scottish babies, and I think she added that for all she knew it might be the same in other parts of the Kingdom.
I should like to make the position about fur headgear absolutely clear, because I think there has been some


misunderstanding. The normal fur headgear that is made for babies is, I am told, made from sheep's wool, lamb's wool or rabbit wool. That has always been exempt and remains exempt. Equally, headgear trimmed with fur which is made for babies is exempt. It has been exempt and remains exempt. The only change is that if some very wealthy parent wishes to put his or her child into a sable hat, a mink hat, a chinchilla hat, or whatever it is, he or she pays the rate of tax which is appropriate to a fur tax. There is no reason why that should not be so, but I re-emphasise the point that babies' headgear, including babies' fur skin headgear remains exempt except for these very expensive furs.
The hon. Member for Coatbridge and Airdrie also said that fur coats are a necessity in Scotland. Again, I merely emphasise that the tax on fur garments has been reduced in this Budget from 50 per cent. to 30 per cent.

Mrs. Mann: I did not ask that fur coats should be reduced at all.

Mr. Simon: They have been reduced, whether the hon. Lady asked or not.
Finally, I think I ought to deal with a point referred to by my hon. Friend the Member for Ormskirk, the hon. Member for Shoreditch and Finsbury and the hon. Member for Airdrie and Coatbridge, which is the question of uplift. I do not think this is an appropriate moment to go into the technicalities of uplift. It is sufficient for me to say that my right hon. Friend does not see any reason to alter the present system. On the other hand, he will read in the OFFICIAL REPORT what has been said and I am, as always I hope, entirely at the disposal of any hon. Member who wishes to make representations about this. I have not myself received any evidence to make me think that the present system is operating unfairly, but I agree with what my hon. and gallant Friend said about the possibility of this operating uneconomically, and I am certainly willing to read what has been said in this debate.

Mr. Collins: When the Minister reads the report of the debate on this point, will he have regard to the fact that the 5 per cent. uplift on a 5 per cent. tax is less than one-quarter of one per cent., because the manufacturer is entitled to

deduct 3¾ per cent. from the wholesale value before calculating the tax? Less than one-quarter of 1 per cent. of £35½ million, which he said was the tax collected on the garments, is approximately £78,000, and £78,000 is far less than the cost to the manufacturing traders of working out those endless calculations, week after week, month after month, and year after year.

Mr. Simon: I would like to consider those figures carefully before committing myself to consenting to them.
Ultimately, we come down to the cost of the concession asked for in these Amendments. That is the reason which must finally determine my right hon. Friend in asking the Committee to reject the Amendment. I hope I have satisfied the Committee that the present system operates not unfairly and, as has been generally admitted, the Purchase Tax is not an operative factor in such misfortunes as these industries are suffering at the moment.

Mr. H. Wilson: I would not have intervened at this stage had it not been for certain remarks of the Financial Secretary. May I say, however—and I am sure that I am speaking for all my right hon. and hon. Friends—that it is an agreeable experience to hear the hon. and learned Gentleman wind up a debate of this kind. I hope I am not upsetting anyone when I say that he appears to us to be a great improvement on some of his recent predecessors in that position, because he addresses himself to the arguments that have been used and deals with them with great courtesy.
I remember once paying the same tribute to the present Minister of Pensions and National Insurance, who was characteristic for the same quality. This will, I hope, lighten our labours considerably during what appears likely to be a lengthy stage of the Finance Bill. We hope that the hon. and learned Gentleman will continue as he has begun.
With many of the things that the hon. and learned Gentleman said, I am sure the Committee will be in agreement. Certainly, we have all been instructed by the expertise produced by certain hon. Gentlemen opposite, by my hon. Friend the Member for Shoreditch and Finsbury (Mr. Collins) and by my other hon. Friends. We have learned a lot, and I


am sure the Treasury Bench has also learned quite a lot during the past few minutes about the mechanism and statistics and accountancy of the uplift operation.
When the hon. and learned Gentleman said also that the clothing trade is a highly competitive one, I am sure we all agreed. That is one of the factors in the relative stability of clothing prices, although there are others. One is the very heavy volume of imports of clothing of various kinds, particularly of clothing made from cotton, silk and rayon goods from Hong Kong, India and other places. That has had a most depressing influence on certain sections of the clothing trade, as Lancashire knows very well to her cost.
I am sure that the hon. and learned Gentleman is also right in saying that the main factor at work has been a switch in consumer buying habits from clothing to other things in the past year or so. The hon. and learned Gentleman said things were more attractive. He must not forget the important effect of higher rents of both council and privately rented houses, because when a family of limited means find that they have to pay 5s., 10s. or 15s. a week more in rent they have to count every penny that is going on things like clothing; and as we have seen over the past few years, clothing tends to be a residuary item in the household budget.
In 1952 and 1953, when prices for food were rising sharply, it was mostly textiles which suffered from the effects of the "squeeze" on household finance—a "squeeze" which hon. Gentlemen opposite have put on household finance with their various manoeuvrings on rent and which has had a serious and direct effect on purchases of the kind of clothing that we have been discussing.
We are glad that the right hon. and learned Gentleman the Chancellor of the Exchequer has removed the tax on wool, not only because it was high by comparison with the position of cotton, synthetics, linen, and so on, but also because Yorkshire is at present depressed to an extremely grave state. I speak with great delicacy and care, being a Yorkshireman with a Lancashire constituency. On the whole, the Yorkshire textile trade does not publicise its difficulties as much as Lancashire. Yorkshire can suffer grievously in matters of short-time working

and unemployment and we in this House do not hear so much of it as, inevitably and rightly, we hear of the Lancashire cotton industry.
The causes are very different. I have heard my hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes), who has a lifetime of experience in this industry, say in the House that he has never known the wool industry as depressed as it is at present; and it is no good talking to him of inflation, and so on, because he sees here acute depression, worse than that at some times during the 1930s, during the great depression. So it was right to do this; but we want to press on the hon. and learned Gentleman the consequences of removing the 10 per cent. from wool while leaving 5 per cent. on cloth. Various possibilities have been put by my hon. Friends, especially by the hon. Member for Shoreditch and Finsbury, and it looks as though there are to be chronic forms of evasion and tax avoidance, much of it legal, by the kind of example that he gave. Are we right, in supposing, as he informed the Committee, that if a customer gives a suit length to a tailor he does not have to pay tax?

Mr. Glover: The customer pays the retail price for the cloth before he goes along to the tailor.

Hon. Members: No.

Mr. Wilson: It looks as though the hon. Member is confused.

Mr. Glover: I was pointing out to the right hon. Gentleman that a person is not likely to do that because the suit will cost him more, for he must pay the retail price for the cloth instead of getting it at the wholesale cost from the tailor.

Mr. Wilson: I do not know as much of this trade as does the hon. Member, but I have heard of people being given suit lengths. I think that it is not unusual in Yorkshire. No tax is then paid.

Mr. Burden: I do not know whether the right hon. Gentleman was given it, but I remember that he came to the House, some time ago, with a suit which was manufactured from synthetic fibre. I am not being objectionable, but I would ask: what applied there?

Mr. Wilson: If I must refer to that suit, it did not last as long as I would


have liked. It was made of Ardil fibre—one of the earliest ventures in synthetic cloth. It was sent to the President of the Board of Trade by the manufacturers. I insisted on paying for it. I got in touch with Lord McGowan and paid for that suit—and I am not sure that I did not overpay. It is most unlikely that the gift will be repeated. Nevertheless, I was grateful for the opportunity of being able to subject that particular new and interesting fibre to the hard wear that I was able to give it.
As I understand the position, someone who comes with a suit length does not have to pay tax and surely my hon. Friend is right in saying that all kinds of "rackets" might start, particularly in large stores where a customer can get cloth in one part of the store and take it to another part and, by that means, avoid the tax. I hope that the hon. and learned Gentleman will look at that very carefully.
9.45 p.m.
The real issue—and I think that the hon. and learned Gentleman recognises it, although he has done nothing about it—is the difficulty mentioned by my hon. Friend the Member for Salford, East (Mr. Frank Allaun), my hon. Friend the Member for Ince (Mr. T. Brown) and other hon. Members, that as a result of the Chancellor's half-hearted decision about wool all kinds of people who have never been in the habit of doing so, will now have to keep records, even though many of them are incapable of doing so. The hand-made tailors and front street tailors, and so on, will have to deal with all these complications.
The Chancellor would never think of asking the proprietor of a village sweet shop to keep records for Purchase Tax purposes. That would have been one of the results of the Kidderminster sales tax proposal and the right hon. Gentleman was right about that. I am not sure that he is not making the whole thing unworkable. The revenue will be very small in comparison with the trouble involved and with the miserable and squalid prosecutions, and so on, which will result. It would have been better if the Chancellor had taken his courage in both hands and removed the tax on the items of clothing as well.
The hon. and learned Gentleman gave the figures of the cost of the Amendment

and we owe it to the Committee to explain why we intend to go into the Division Lobby on this matter. It is our very strong impression—the hon. and learned Gentleman, quite understandably, did not have the figures readily available—that over the clothing range, as a result of the 5 per cent. tax, the Government will be getting more than they were getting in the times of the Utility scheme, when there was a high proportion of Utility wear, and probably more in total revenue than at the time of the D scheme. We may be wrong about that, but the hon. and learned Gentleman does not seem to have any figures to disprove that, and it remains a very strong impression in many quarters.

Mr. Burden: This is not a comparable argument, because at the time of the D scheme and the Utility scheme there was a shortage of clothing and those schemes were a form of restriction of rationing, whereas today there is none of that and there is a much wider choice.

Mr. Wilson: Despite his trade expertise, the hon. Member is wide of the mark. Clothes rationing was removed on 14th March, 1949—I remember the occasion very well—although the Utility scheme continued long after 14th March, 1949. The ration was removed only when it was possible to do so safely without a shortage of supplies. There was no scarcity and the D scheme came in in 1952 and lasted another three years, so that the hon. Gentleman was not up to his usual standard of expertise. As the hon. and learned Gentleman said, total demand has not markedly increased over the past few years. It seems that the Government are taking, relative to those days, an excessive proportion in Purchase Tax.
The Committee will recognise our difficulty in that we do not want to remove the whole scope of the tax. We are not interested in mink babies, or baby minks—I will not be thrown by any Member into pursuing that any further, because I know the joke as well as hon. Members do.

Mr. Nabarro: Who, me?

Mr. Wilson: There are other hon. Members in the Chamber.
Nevertheless, it seems to us that here are many items within this range which


ought to be tax-exempt—although perhaps not all. It is impossible, within the usual rules of order, for the convenience of the Committee to single out each and every one, and we have had to put down the somewhat omnibus Amendment which was moved by my hon. Friend the Member for Walthamstow, West (Mr. Redhead).
We shall vote for that Amendment, but we do not intend to vote for the others. That does not mean that we are necessarily in favour of removing from tax the whole range covered by that Amendment. If the hon. and learned

Gentleman had been willing to say that the Government were prepared to remove this and that item while keeping the tax on the others, we would have been only too ready to abstain from voting, but despite the courteousness and very agreeable speech of the hon. and learned Gentleman he showed no flexibility on this matter and we have no alternative but to divide the Committee.

Question put, That those words be there inserted:—

The Committee divided: Ayes 181, Noes 204.

Division No. 134.]
AYES
[9.50 p.m.


Ainsley, J. W.
Griffiths, Rt. Hon. James (Llanelly)
Mort, D. L.


Albu, A. H.
Griffiths, William (Exchange)
Moyle, A.


Allen, Scholefield (Crewe)
Grimond, J.
Neal, Harold (Bolsover)


Bacon, Miss Alice
Hale, Leslie
Noel-Baker, Francis (Swindon)


Baird, J.
Hall, Rt. Hn. Glenvil (Colne Valley)
Oliver, G. H.


Benson, Sir George
Hamilton, W. W.
Oram, A. E.


Beswick, Frank
Hannan, W.
Orbach, M.


Blackburn, F.
Harrison, J. (Nottingham, N.)
Paget, R. T.


Boardman, H.
Hastings, S.
Paling, Rt. Hon. W. (Dearne Valley)


Bonham Carter, Mark
Hayman, F. H.
Palmer, A. M. F.


Bottomley, Rt. Hon. A. G.
Henderson, Rt. Hn. A. (Rwly Regis)
Pannell, Charles (Leeds, W.)


Bowden, H. W. (Leicester, S. W.)
Herbison, Miss M.
Pargiter, G. A.


Bowen, E. R. (Cardigan)
Hewitson, Capt. M.
Parker, J.


Boyd, T. C.
Holman, P.
Parkin, B. T.


Brockway, A. F.
Holmes, Horace
Pentland, N.


Brown, Rt. Hon. George (Belper)
Howell, Denis (All Saints)
Popplewell, E.


Brown, Thomas (Ince)
Hoy, J. H.
Prentice, R. E.


Burke, W. A.
Hubbard, T. F.
Price, J. T. (Westhoughton)


Burton, Miss F. E.
Hughes, Cledwyn (Anglesey)
Price, Philips (Gloucestershire, W.)


Butler, Herbert (Hackney, C.)
Hughes, Emrys (S. Ayrshire)
Probert, A. R.


Butler, Mrs. Joyce (Wood Green)
Hunter, A. E.
Randall, H. E.


Callaghan, L. J.
Hynd, H. (Accrington)
Rankin, John


Carmichael, J.
Hynd, J. B. (Attercliffe)
Redhead, E. C.


Castle, Mrs. B. A.
Irvine, A. J. (Edge Hill)
Rhodes, H.


Chapman, W. D.
Irving, Sydney (Dartford)
Robens, Rt. Hon. A.


Chetwynd, G. R.
Isaacs, Rt. Hon. G. A.
Roberts, Albert (Normanton)


Clunie, J.
Jay, Rt. Hon. D. P. T.
Roberts, Goronwy (Caernarvon)


Coldrick, W.
Jeger, Mrs. Lena (Holbn &amp; St. Pncs, S.)
Robinson, Kenneth (St. Pancras, N.)




Rogers, George (Kensington, N.)


Collick, P. H. (Birkenhead)
Jenkins, Roy (Stechford)
Ross, William


Collins, V. J. (Shoreditch &amp; Finsbury)
Jones, David (The Hartlepools)
Royle, C.


Corbet, Mrs. Freda
Jones, Elwyn (W. Ham, S.)
Short, E. W.


Craddock, George (Bradford, S.)
Jones, J. Idwal (Wrexham)
Silverman, Julius (Aston)


Dalton, Rt. Hon. H.
Jones, T. W. (Merioneth)
Silverman, Sydney (Nelson)


Davies, Ernest (Enfield, E.)
Kenyon, C.
Slater, Mrs. H. (Stoke, N.)


Davies, Stephen (Merthyr)
Key, Rt. Hon. C. W.
Sorensen, R. W.


Deer, G.
Lawson, G. M.
Steele, T.


de Freitas, Geoffrey
Lindgren, G. S.
Stewart, Michael (Fulham)


Delargy, H. J.
Logan, D. G.
Stonehouse, John


Diamond, John
Mabon, Dr. J. Dickson
Stones, W. (Consett)


Dodds, N. N.
McAlister, Mrs. Mary
Strachey, Rt. Hon. J.


Dugdale, Rt. Hn. John (W. Brmwch)
MacDermot, Niall
Stross, Dr. Barnett (Stoke-on-Trent, C.)


Dye, S.
McGhee, H. G.
Sylvester, G. O.


Ede, Rt. Hon. J. C.
McGovern, J.
Taylor, Bernard (Mansfield)


Edwards, Rt. Hon. John (Brighouse)
McInnes, J.
Taylor, John (West Lothian)


Edwards, Robert (Bilston)
McKay, John (Wallsend)
Thornton, E.


Edwards, W. J. (Stepney)
McLeavy, Frank
Tomney, F.


Evans, Albert (Islington, S. W.)




Fernyhough, E.
MacMillan, M. K. (Western Isles)
Viant, S. P.


Fletcher, Eric
MacPherson, Malcolm (Stirling)
Wade, D. W.


Foot, D. M.
Mallalieu, E. L. (Brigg)
Weitzman, D.


Forman, J. C.
Mann, Mrs. Jean
Wells, William (Walsall, N.)


Fraser, Thomas (Hamilton)
Marquand, Rt. Hon. H. A.
West, D. G.


Gaitskell, Rt. Hon. H. T. N.
Mason, Roy
Wheeldon, W. E.


George, Lady Megan Lloyd (Car'then)
Mayhew, C. P.
White, Mrs. Eirene (E. Flint)


Gibson, C. W.
Mellish, R. J.
Wilcock, Group Capt. C. A. B.


Gordon Walker, Rt. Hon. P. C.
Mitchison, G. R.
Willey, Frederick


Grenfell, Rt. Hon. D. R.
Moody, A. S.
Williams, David (Neath)


Grey, C. F.
Morris, Percy (Swansea, W.)
Williams, Rev. Llywelyn (Ab'tillery)


Griffiths, David (Rother Valley)
Morrison, Rt. Hn. Herbert (Lewis'm, S.)
Williams, Rt. Hon. T. (Don Valley)




Willis, Eustace (Edinburgh, E.)
Woof, R. E.
TELLERS FOR THE AYES:


Wilson, Rt. Hon. Harold (Huyton)
Yates, V. (Ladywood)
Mr. Pearson and Mr. Simmons.


Woodburn, Rt. Hon. A.






NOES


Agnew, Sir Peter
Graham, Sir Fergus
Nabarro, G. D. N.


Aitken, W. T.
Green, A.
Nairn, D. L. S.


Allan, R. A. (Paddington, S.)
Grimston, Hon. John (St. Albans)
Neave, Airey


Amory, Rt. Hn. Heathcoat (Tiverton)
Grimston, Sir Robert (Westbury)
Nicholls, Harmar


Arbuthnot, John
Grosvenor, Lt.-Col. R. G.
Nicolson, N. (B'n'm'th, E. &amp; Chr'ch)


Armstrong, C. W.
Hall, John (Wycombe)
Oakshott, H. D.


Ashton, H.
Harris, Frederic (Croydon, N. W.)
O'Neill, Hn. Phelim (Co. Antrim, N.)


Atkins, H. E.
Harris, Reader (Heston)
Orr, Capt. L. P. S.


Baldwin, A. E.
Harvey, John (Walthamstow, E.)
Osborne, C.


Balniel, Lord
Heald, Rt. Hon. Sir Lionel
Page, R. G.


Barlow, Sir John
Hesketh, R. F.
Pannell, N. A. (Kirkdale)


Barter, John
Hicks-Beach, Maj. W. W.
Partridge, E.


Beamish, Col. Tufton
Hill, Mrs. E. (Wythenshawe)
Peel, W. J.


Bell, Philip (Bolton, E.)
Hobson, John (Warwick &amp; Leam'gt'n)
Peyton, J. W. W.


Bell, Ronald (Bucks, S.)
Holland-Martin, C. J.
Pike, Miss Mervyn


Bennett, Dr. Reginald
Hope, Lord John
Pilkington, Capt. R. A.


Bevins, J. R. (Toxteth)
Hornby, R. P.
Pitman, I. J.


Bingham, R. M.
Hornsby-Smith, Miss M. P.
Powell, J. Enoch


Birch, Rt. Hon. Nigel
Horobin, Sir Ian
Price, David (Eastleigh)


Bishop, F. P.
Howard, Gerald (Cambridgeshire)
Price, Henry (Lewisham, W.)


Body, R. F.
Howard, John (Test)
Prior-Palmer, Brig. O. L.


Boothby, Sir Robert
Hudson, W. R. A. (Hull, N.)
Profumo, J. D.


Boyle, Sir Edward
Hughes Hallett, Vice-Admiral J.
Ramsden, J. E.


Braine, B. R.
Hughes-Young, M. H. C.
Rawlinson, Peter


Braithwaite, Sir Albert (Harrow, W.)
Hurd, A. R.
Redmayne, M.


Brooman-White, R. C.
Hutchison, Michael Clark (E'b'gh, S.)
Renton, D. L. M.


Browne, J. Nixon (Craigton)
Hyde, Montgomery
Ridsdale, J. E.


Burden, F. F. A.
Hylton-Foster, Rt. Hon. Sir Harry
Rippon, A. G. F.


Butcher, Sir Herbert
Irvine, Bryant Godman (Rye)
Roberts, Sir Peter (Heeley)


Carr, Robert
Jenkins, Robert (Dulwich)
Rodgers, John (Sevenoaks)


Chichester-Clark, R.
Jennings, Sir Roland (Hallam)
Roper, Sir Harold


Clarke, Brig. Terence (Portsmth, W.)
Johnson, Dr. Donald (Carlisle)
Ropner, Col. Sir Leonard


Cooke, Robert
Johnson, Eric (Blackley)
Russell, R. S.


Cooper-Key, E. M.
Jones, Rt. Hon. Aubrey (Hall Green)
Scott-Miller, Cmdr. R.


Cordeaux, Lt.-Col. J. K.
Joseph, Sir Keith
Sharples, R. C.


Corfield, Capt. F. V.
Kerr, Sir Hamilton
Shepherd, William


Craddock, Beresford (Spelthorne)
Kershaw, J. A.
Simon, J. E. S. (Middlesbrough, W.)


Crosthwaite-Eyre, Col. O. E.
Kimball, M.
Smithers, Peter (Winchester)


Crowder, Petre (Ruislip—Northwood)
Kirk, P. M.
Speir, R. M.


Cunningham, Knox
Lancaster, Col. C. G.
Stanley, Capt. Hon. Richard


Currie, G. B. H.
Langford-Holt, J. A.
Steward, Harold (Stockport, S.)


Davidson, Viscountess
Leather, E. H. C.
Steward, Sir William (Woolwich, W.)


D'Avigdor-Goldsmid, Sir Henry
Leburn, W. G.
Storey, S.


Deedes, W. F.
Legh, Hon. Peter (Petersfield)
Studholme, Sir Henry


Digby, Simon Wingfield
Lindsay, Hon. James (Devon, N.)
Summers, Sir Spencer


Dodds-Parker, A. D.
Lindsay, Martin (Solihull)
Sumner, W. D. M. (Orpington)


Donaldson, Cmdr. C. E. McA.
Linstead, Sir H. N.
Taylor, Sir Charles (Eastbourne)


du Cann, E. D. L.
Lloyd, Rt. Hon. Selwyn (Wirral)
Temple, John M.


Dugdale, Rt. Hn. Sir T. (Richmond)
Longden, Gilbert
Thomas, Leslie (Canterbury)


Duncan, Sir James
Low, Rt. Hon. Sir Toby
Thompson, Kenneth (Walton)


Duthie, W. S.
McAdden, S. J.
Thornton-Kemsley, Sir Colin


Eden, J. B. (Bournemouth, West)

Tiley, A. (Bradford, W.)


Elliott, R. W. (Ne'castle upon Tyne, N.)
Macdonald, Sir Peter
Turton, Rt. Hon. R. H.


Emmet, Hon. Mrs. Evelyn
McKibbin, Alan
Vane, W. M. F.


Errington, Sir Eric
Mackie, J. H. (Galloway)
Vickers, Miss Joan


Finlay, Graeme
McLaughlin, Mrs. P.
Wakefield, Edward (Derbyshire, W.)


Fletcher-Cooke, C.
McLean, Neil (Inverness)
Wall, Patrick


Fort, R.
MacLeod, John (Ross &amp; Cromarty)
Ward, Rt. Hon. G. R. (Worcester)


Fraser, Hon. Hugh (Stone)
Macmillan, Maurice (Halifax)
Ward, Dame Irene (Tynemouth)


Fraser, Sir Ian (M'cmbe &amp; Lonsdale)
Macpherson, Niall (Dumfries)
Whitelaw, W. S. I.


Freeth, Denzil
Maddan, Martin
Williams, R. Dudley (Exeter)


Galbraith, Hon. T. G. D.
Manningham-Buller, Rt. Hn. Sir R.
Wills, G. (Bridgwater)


Gammans, Lady
Marlowe, A. A. H.
Wilson, Geoffrey (Truro)


Gibson-Watt, D.
Marshall, Douglas
Woollam, John Victor


Glover, D.
Mathew, R.
Yates, William (The Wrekin)


Glyn, Col. Richard H.
Maudling, Rt. Hon. R.



Godber, J. B.
Mawby, R. L.
TELLERS FOR THE NOES:


Goodhart, Philip
Medlicott, Sir Frank
Colonel J. H. Harrison and


Gough, C. F. H.
Milligan, Rt. Hon. W. R.
Mr. Bryan.


Gower, H. R.
Morrison, John (Salisbury)

Mr. H. Wilson: I beg to move, That the Chairman do report Progress and ask leave to sit again.
The reason for moving this Motion is not the smallness of the Government

majority, although obviously in the interests of the Government it would be wiser for us to adjourn now before their majority entirely disappears. However, that is not the purpose of my intervention.


It is that I thought this might give the Chancellor an opportunity to explain what are his intentions about the length of this sitting.

10.0 p.m.

Mr. Amory: I am grateful to the right hon. Member for Huyton (Mr. H. Wilson) for raising this question and for being so solicitous about our majority. I am getting a bit worried about the rate of progress we are making. I have no complaint to make whatever about any of the speeches that hon. Gentlemen or hon. Ladies have made on either side of the Committee. They all seem to have been relevant to the subjects we are discussing. However, time is going and a tremendous lot of Amendments are ahead of us.
I do not want to have more late night sittings if we can possibly avoid it. I know the inconvenience that is caused to hon. Gentlemen, especially at what I might call an "intermediate" hour. We must among us try to make more rapid progress than we have been making recently. It would probably be for the convenience of hon. Members, if we must sit late, to sit during one night instead of two nights. I am hoping that we can get two more Amendments done before we go tonight. We must see how we get along. I would ask hon. Gentlemen and hon. Ladies, as well as right hon. Gentlemen, to bear in mind that, at the present rate of progress, we shall inevitably have a very long Sitting tomorrow. I do not want to say more than that at the present stage. I hope hon. Members generally will try to keep their remarks as short as they feel they can in covering the case they are presenting, and we on our side in replying to the debates will try to do the same.

Mr. Wilson: We have been warned that the night is passing and of what may lie in store for us tomorrow evening, when we shall be quite ready to continue the debate until whatever time is required. The Chancellor of the Exchequer was quite fair in saying that there has been no waste of time, particularly yesterday when the debate was shared between both sides of the Committee, and especially upon issues involving a considerable amount of expertise.
We spent two hours today debating an Amendment moved by the hon. Member for Kidderminster (Mr. Nabarro), whose fighting qualities are now becoming a little more obvious to the Committee than they were before the debate today. If ever there were a warrior who wished to wound but feared to strike, it is the hon. Member for Kiddermintser. If he is to go on like this there might be a means of saving Government time by his moving only those Amendments about which he feels sufficiently strongly to support in the Lobby. I do not want to put any ideas into his head. That might be one way of giving effect to what the Chancellor has in mind.
The debate has certainly been economical in time. The main speeches have been very short. We welcome the suggestion that we do not want to sit late tonight. I do not know whether we can get the two Amendments at a reasonable hour, but we shall see. I hope that in planning the rest of the Finance Bill debate the Chancellor of the Exchequer will remember that there are transport difficulties, not simply those arising out of the situation in the bus industry, but generally. I will try, and I hope that the right hon. Gentleman will try, to adjust our timing, so far as it lies within our control, to those considerations. I beg to ask leave to withdraw the Motion.

Motion, by leave, withdrawn.

Mr. John Rankin: I beg to move, in page 29, line 21, after "apparatus)", to insert:
other than tax in respect of cathode ray tubes".

The Deputy-Chairman (Sir Gordon Touche): I think it would for the convenience of the Committee also to discuss the four following Amendments: in page 29, line 22, to leave out "gramophones"; in line 22, to leave out "radio-gramophones"; in line 23, to leave out "player pianos"; and in line 24, to leave out from "thereto" to "or" in line 25.

Mr. Rankin: Your suggestion, Sir Gordon, is quite convenient to us. I shall seek to address myself solely to the first Amendment on cathode ray tubes, and my hon. Friends will in succession deal with the four Amendments that follow.
I think the Chancellor should note that there was much dismay in many homes when he failed to reduce the tax on


cathode ray tubes. Television, as the Financial Secretary indicated in his reply to a previous debate, is growing more and more rapidly, and the apparatus is very costly to install. The chief difficulty is the maintenance of the apparatus. The cathode ray tube has no guarantee of extended life. Most manufacturers do not offer a guarantee extending beyond six months. Most people who get two or three years' service from the tube feel rather lucky.
The maintenance of a television set is a fairly costly item, because even with the reductions which were forced as a result of the Monopolies Commission Report, the 17-inch cathode ray tube remains at the fairly high price of £21. Most people were thinking that there might be some concession from the Chancellor in regard to the high tax of 60 per cent. levied on these tubes. Therefore, his decision not to reduce the tax was received with a great deal of dismay in many homes. We hope that when he has heard what is to be said in this debate he will come to the conclusion that he ought to adopt the Amendment and reduce the tax from 60 per cent. to 30 per cent.
The proceedings of the Monopolies Commission gave us an insight into what goes on in the manufacture of these tubes. I shall give some figures which were established by the Financial Times last year. I wish first to refer to the cathode ray replacement tube produced by Messrs. Mullard who, I think, are the largest individual producers of cathode ray tubes in the country and who supply 37 per cent. of the total output. In 1954, the manufacturers' cost of the 14-inch tube was £5 6s., and on that there was a profit of £4 9s., which is an enormous, almost unbelievable, profit, giving a wholesale price of £9 15s. When the Commission was nearing the end of its inquiry and after it had heard a great deal of evidence from manufacturers and carried out considerable inquiries, action was taken by all the producers, including Messrs. Mullard, to reduce the £5 6s. tube to £4 6s. and reduce the profit from £4 9s. on each tube to £2 13s. That was a considerable cut.
That action reminded me of words I had used in the House when speaking in the debate on monopolies in 1955. I said that from an assessment which I had

made, guided by people who were expert in business:
the manufacturing cost of the tube will be about £3 10s."—[OFFICIAL REPORT, 24th February, 1955; Vol. 537, c. 1552.]
That was the 14-inch tube. Subsequent action confirmed, fairly adequately, the statement which I made in this House in 1955.
10.15 p.m.
As a result of these changes, the price of the 14-inch tube, which was £20 10s. in 1954, is now £17 5s., and that is not an unreasonable reduction; but I shall have more to say about it later. I want to establish a rather interesting point from that. The manufacturer has reduced the profit which he was getting from £4 9s. to £2 13s. The wholesaler has reduced his profit from £1 15s. to £1 6s. The retailer, for some reason that I cannot explain, keeps his profit at £3 5s., and the Government have reduced the Purchase Tax from £5 15s. to £5 5s.
Here is the interesting point. If we take all the margins and add them up and get the total margin of profit that is created as we go through the various grades, we find that in 1954 the Government were extracting from the sale of a tube a profit of 37 per cent., but today they are extracting a profit of 42 per cent. The Government which instituted the inquiry in order to force reductions in the prices of television tubes are the same people who are shoving up their profit from 37 per cent. to 42 per cent. I hope that they can justify that.
Why should the Government put up their percentage of cut, if I may use that word, by the considerable amount of 5 per cent., at a time when, as has been shown in the previous debate, money has become scarcer and when people in many grades of society are finding it harder and harder to make ends meet. The Government which advocate cutting for others are the same people who take more for themselves.
I now turn to the 17-inch tube, where the figures are even more interesting. Again, we find that as a result of the Monopolies Commission the price of the 17-inch tube, which in 1954 was £24 13s., is now £21 4s., a reduction in price which, of course, we welcome. Again, if we take the margins of profit right through the whole process, we find that the margin of profit for the manufacturer has been reduced from £4 5s. to £2 5s. A profit of £4 5s. on an article costing £7 10s.


is a good profit, and that was the profit that was being derived in 1954. However, again on the urging of the Monopolies Commission, that has been reduced by £2 to £2 5s. The wholesalers' margin has been reduced from £2 2s. to £1 12s. Unfortunately, the retail margin has been increased by 2s.—from £3 18s. to £4.
If, however, we take all the margins of profit that are created throughout the process of making and distributing this tube, we find that the Government, which in 1954 was getting from this Purchase Tax 37 per cent. profit, if we can call it that—[HON. MEMBERS: "No."] Very well, we will not call it so, although the person who buys the tube has to pay that £6 extra to the Government just as he has to pay the £2 5s. extra to the manufacturer. Therefore, I regard it as the "cut" that the Government are making on the process. In 1954, it was 37 per cent. This year it is 45 per cent. It has gone up by 8 per cent.
It really is very difficult to justify that. Surely, it is not too much to hope that the Government will not, in 1958, take more out of the process of getting the tube from the manufacturer into the home than they did in 1954. Surely, we might have expected that when they were urging all the others engaged in the business to reduce their margin, the Government might themselves have considered the advisability of reducing the Purchase Tax which they inflicted on the purchaser.
There is another aspect of this. We feel that these tubes could come down still further in price. Despite the reductions that have been made as a result of the inquiry, Associated Electrical Industries which, in 1953, made a profit of £12,456,000 odd, in the first six months of 1956–57 made a profit of £6,760,000 which, on a yearly rate, represents a profit of over £13½ million. Therefore, that firm can produce at a lower price and still make a greater profit than it did in previous years, and we feel that there is reason for arguing that still further reductions in price could be made. But how can we add to the strength of our argument when such firms say to us: "While we reduce our price, the Government simply put up the Purchase Tax margin still further"?
In June, 1954, Electrical and Musical Industries made a profit of £1,428,000.

In 1956–57 its profit was £6 million. There is room for still further reductions. The General Electric Company which, in 1953, made a profit of £6½ million and in 1954 a profit of £8¼ million, made a profit in 1956–57 of £9,700,000. There is room for further reductions in the price of the cathode ray tube which, I hope, if we succeeded in getting, would be welcomed by all parties. But we shall not be helped in achieving it so long as the Government do nothing about making a contribution on their side, and so help to reduce the price at the same time as they urge the manufacturers to do so.
I will not enter into an argument whether television is a luxury, an essential or an amenity. I think that most people regard it as an essential. Apart from its entertainment value, it has a cultural value. It introduces millions of people to scenes, countries and persons which they would otherwise never see. It introduces people to specific topics apart from its general value. It introduces them to political life and political arguments in a vivid and interesting fashion. It lets them see political personalities and persons prominent in all spheres of life. Consequently, it is something that we want to make available to as many people as possible as cheaply as possible.
At present prices, it is very difficult to do that. A television set is a fairly costly piece of apparatus, not only to purchase but to maintain. The cathode ray tube costs a sum of money which people do not spend easily. Consequently, it is our business to reduce the price not merely of the set but of the tube. Many people are contributing towards doing that, and the only people who seem to be refusing to line up are the Government. I hope the Government will listen to the argument which I have set forth, which will be substantiated by hon. Friends of mine, that there is a real case for reducing the tax on the cathode ray tube from 60 per cent. to 30 per cent. I hope the right hon. Gentleman will give careful consideration to that plea.

Dr. Stross: My interest is in the last of these Amendments, the one referring to gramophone records. I take this matter very seriously, and I think I shall have the sympathy and ear of hon. Members


on all sides of the Committee when I state my case.
We were all surprised to find that gramophone records had been left subject to tax at the rate of 60 per cent. We welcome the reduction in the number of rates, but we cannot understand why there should be discrimination against gramophone records in that they are taxed at 60 per cent. when certain goods which are accepted by all of us as being in the luxury class are taxed at 30 per cent.
The gramophone record at its best is part of our community's cultural life now. When we ask for information about the sort of records now being made, we find that 20 per cent. are recordings of classical and serious music of the highest level. The remaining 80 per cent. are a mixture of what might be termed middle-brow and popular or light music. I hope that right hon. Gentlemen opposite will not in any way attempt to denigrate light, popular or middle-brow music. They do not discriminate against the popular novel by taxing it. We do not discriminate against the living theatre now by taxing it. What the living theatre presents on the stage is often a very light form of entertainment. We do not discriminate there, so we should not discriminate against records either.
I am personally, by addiction, more interested in the most serious type of music, and it is that which, in the main, I have in mind. The anomalies which are created by this action of the Treasury in imposing the 60 per cent. tax on records can be seen when one studies the position in this way. The tax on the musical instrument is now reduced to 30 per cent. When the musician uses it in the Albert Hall, or the Festival Hall, his work is not subject to tax. When he uses it in the recording studio to make records in order that that which he does may go into the homes of our citizens, then tax is imposed at the rate of 60 per cent. It does not seem very sensible. Nor is it very logical.
No one in this Committee now denies, or has at any time denied, the continuous need of the Treasury to find the money for its purposes. Revenue must be got, but we have a right as citizens,

and as representatives of the citizens, to discriminate in how we get our revenue. Certainly, there should be no attack upon the cultural life of the community.
Interest in what is called, for want of a better term, good music—rather a poor term—in serious music in this country has in the post-war years grown very considerably indeed. Some of the figures given by my hon. Friend the Member for Govan (Mr. Rankin), describing the increase in profits made by some of the great companies, is, in part, evidence of what I am now saying. For a time before the war, during the 'thirties, there was a fall in the sales of recordings. Towards 1939 they began to improve. Since the war the sales have increased considerably. They are now well up to what they were in, say, the late 'twenties, when records in record making appeared to be made.
The impact of this Purchase Tax upon records is that the price of them is, roughly, 40 per cent. higher than if there were no Purchase Tax. This must have some impact on sales. I have made inquiries. I asked one of the large firms which make these records what its views were. The firm referred me to its annual review for the year ended June, 1956. This is Electrical and Musical Industries. This is what it said:
If the burden of Purchase Tax were removed from the United Kingdom gramophone record there is every indication that the increased sales would enable us within five years to put the best recordings of the greatest masterpieces of music within the reach of all but the most restricted family budgets.
We as legislators should take note of that, and if we accept it we should do everything in our power to bring it about.
10.30 p.m.
I myself do not find it possible to separate any of the fine arts. Nor is it easy to grade them in importance. Only a pedantic art historian would separate painting from sculpture, sculpture from architecture, architecture from music, music from poetry or drama. To me, they are part of one family, and I find it impossible to separate them. The only difference that I can think of is that to appreciate some we use the ear and to appreciate others we use our eyes.
But of all the arts, perhaps the most persuasive and pervasive, which has the greatest influence all over the world, is


the art of music. I do not want to be sentimental or sententious, but it is impossible to believe that there is any higher form of art than, say, one of the late quartets of Beethoven. It is a fact that in listening to works of art of this type it is not only the direct sensuous impressions that we appreciate, but that behind these there is a whole host of impressions belonging to us ourselves individually. Such impressions vary from person to person, and they vary from time to time. They are as illimitable as the music itself is. No one should be denied the consolation that this type of inspiration offers to us. Unfortunate is the person who is unused to it and does not like it.
The vast majority of people in the world easily become addicted to the greatest form of music, and it happens to be music in our mode, the Western mode, invented in Europe. It has conquered not only Europe as time has gone by, but nearly all parts of the world. It is now making its way throughout China. It forms a sort of universal language. It never separates one man from his neighbour, but it seems to join us.
It may well be that in another generation or two this invention of the West will be the normal and common mode of music practised in every part of the world and so accepted. If this should happen it will be a matter of the highest importance. In the past, philosophers like Plato and Aristotle considered that this was of the greatest significance. They thought that man became assimilated to tie music to which he listened, that as men listened to music their own character changed. It will be remembered that even a tyrant like Hitler was terrified of the music that was coming into his country before and during the war and that he forbade his people to listen to it for fear that he would not be able to mould them in the way he wished. He may well have believed in the views of Aristotle.
A universal language based upon an invention that we have given to the world, together with one or perhaps only two other things—our great Gothic architecture and our own Western form of mathematics from Descartes to Einstein—is something to be proud of. To deny a citizen opportunities to listen to recordings as easily as possible and bought as cheaply as possible would be a tremendous mistake.
Lastly, may I do what I rarely do, and that is to quote Shakespeare on the subject of music. In "The Merchant of Venice", Act V, scene 1, Lorenzo says:
The man that hath no music in himself,
Nor is not mov'd with concord of sweet sounds,
Is fit for treasons, stratagems, and spoils;
The motions of his spirit are dull as night.
And his affections dark as Erebus;
Let no such man be trusted …
Dare I suggest that citizens should not trust any Government that stands between themselves and the enjoyment of the fine arts? As I am speaking of music and recordings. I think that this quotation is apt.

Mr. Chapman: There is little that anyone can add to such an eloquent plea as that made by my hon. Friend the Member for Stoke-on-Trent, Central (Dr. Stross). It is an appropriate moment to say that many of us on this side of the Committee feel that a tribute should be paid to my hon. Friend's continual activity on behalf of cultural amenities generally. We all admire very much his work in that direction. The obvious sincerity with which he put his case tonight showed how deeply he feels as well as how actively he works on this issue.
I want to say only a few words about gramophone records, although I feel almost as strongly about them as my hon. Friend. It is a strange situation when we reflect that over the years we have freed from Purchase Tax things like books and we have freed the living theatre from tax, and that rather than tax things like orchestras we nowadays provide subsidies for them, but that we now have a final tax remaining on something cultural, on musical records, at the very highest rate of Purchase Tax. It makes me think that we must have got things the wrong way round if we are in that situation today.
My first question to the Solicitor-General is to ask why, at a time when, in the Budget, we are reducing the tax on musical instruments, we are nevertheless maintaining it on gramophones and gramophone records? I should have thought that if other musical instruments have a case for reduction of tax, we could equally well apply it to gramophones and gramophone records. It is an extraordinary decision that our highest rate of taxation should remain on these things.
My hon. Friend said that from what he could gather, about 10 or 20 per cent.—my information is that the figure is smaller than that—of sales of records are of classical records. This is rather a scandal. I am assured by the chairman of one of our biggest gramophone record firms that experience shows that this is not due to any lack of interest by the general public, but is entirely a function of the fact that nowadays, to get a proper recording of most classical works, one has to buy a long-playing record, which involves a cost of about £2, between 10s. and 15s. of which is Purchase Tax. It is fantastic if we have now cut down, as seems to be the case, a great audience to classical musical recordings by a penal rate of taxation which amounts to between 10s. and 15s. out of a total of about £2.
Can the Solicitor-General tell us what information the Treasury has about the impact of this tax on the cost of gramophone records? Those of us who watch American newspapers frequently see long-playing records advertised at 2 dollars 90 cents., or approximately £1, but we know that the cost in this country is nearly always double that figure. Is it because our home sales are so restricted by this tax that, in terms of industrial production, it is impossible to get a long enough run to bring these prices down? Is it due totally to Purchase Tax or is it due, in addition, to the fact that if more records could be made the price could be reduced? If so, again we have an additional case for asking for a reduction in the tax.
I understand that the recording companies spend about 75 per cent. of their total outgoings on classical recordings. This is an extraordinarily high figure, and I think that it is, to some extent, a tribute to them that they undertake a great deal of this less remunerative expenditure in order to make these recordings available, when they yield only a relatively small part of their total revenue.
The companies tell me that their largest export market for records is the United States. They find that it is only because of the huge sales in the United States that they are able to keep going their heavy recording programmes of classical works. Is this the fact? Are we in the fantastic situation now of being dependent, very largely, on a large export

market in America in order to keep going classical recordings in this country? If this be so, it provides a third reason for saying that the tax has now reached a ridiculous stage.
The chairman of one company says in his letter:
The continuation of Purchase Tax at the present rate may well, in the next year or two, jeopardise this activity"—
he means classical recording—
particularly if the general level of the industry declines, as it may well do with the lessened industrial activity in the country which would appear to be developing at the present time. It has always seemed anomalous that, whilst books have never been subject to Purchase Tax, records have been taxed at nearly the highest, and now"—
in this Budget—
at the highest rate of tax.
There is a great deal in this case. When I began to look into it, I did not think that the case would prove to be so strong as I find it to be.
I have added only one or two points to what was said by my hon. Friend in his very eloquent speech. It is a formidable case. I hope that we shall never reach the stage when it can be said that the British Parliament is legislating for a tax on culture. If the facts which we on this side have put before the Committee are correct, it will be possible to level that accusation against us. I hope that the right hon. and learned Gentleman can promise some relief and that we shall not be in danger of being in the dock and hearing the dreadful accusation laid against us that we are the taxers of culture.

The Solicitor-General: This series of debates has effected some very strange marriages. I cannot at the moment bring to mind the right way to marry the gramophone record and the cathode ray tube, because, in this fiscal context, they appear to depend on entirely different considerations.
I listened with the greatest interest to the speech of the hon. Member for Glasgow, Govan (Mr. Rankin). As regards any way in which the price of a cathode ray tube or a television set could be reduced, one would be eager to be allied with him, but I did not altogether follow how he directed what he was saying to the quite different problem which arises on his Amendment, namely, what is the right rate in terms of Purchase Tax, in the public interest, at which to tax cathode ray tubes?
I ask the Committee to take the view that there are the soundest possible reasons for taxing cathode ray tubes at the same rate as the television sets into which they go. The Amendment moved by the hon. Gentleman the Member for Govan does not touch the question of what should be the right rate of Purchase Tax for a television set, and, if the hon. Gentleman will allow me to continue for a moment, I will seek to put to him the reason that we say that one must keep the rate on the set and the rate on the cathode ray tube the same.

10.45 p.m.

Mr. Rankin: Surely I made the point, although perhaps not clearly enough, that in the case of the television set there was one fixed payment. In the case of the cathode ray tube there might be recurring payments. Because of that, there is a difference, and, therefore, there should be a difference in the tax, also.

The Solicitor-General: I was endeavouring to explain the grounds on which it seemed desirable to have the same rate of tax on the cathode ray tubes as on the set. It is for the protection of the Revenue. The hon. Gentleman and the Committee will follow the argument that if the cathode ray tube could be sold separately from the set and then attached to the set at some later stage, there could quite easily be a process of avoiding Purchase Tax if the rates were different. It is necessary to protect the Revenue against that.
I do not wish to appear to claim a skill which I do not possess, but I understand that to mortals more skilled than I the assembling of a television set is a relatively easy affair. A lot of so-called "kits" are sold and it would be possible to assemble a television set containing a cathode ray on which a separate rate of Purchase Tax was paid for the cathode ray tube.

Mr. Rankin: The right hon. and learned Gentleman is introducing another argument. I attacked the manufacturers on the ground that they were extracting too much profit. He is attacking them for their moral attitude. He does not trust them.

The Solicitor-General: It is difficult to follow how the hon. Gentleman attaches his attack on the manufacturers to the Amendment to which I am compelled to address myself.
What is involved in the Amendment is what is the right rate at which to charge tax on the cathode ray tube. Should we take it out of the category in which the set is charged? That is the problem. I am answering the hon. Gentleman, in the only way I can, by giving the reason for rejecting the Amendment and explaining what we think are the right reasons for keeping the tube taxed as it is at the same rate as the set.
If I may now pass to gramophone records—

Mr. H. Wilson: Before leaving that point, will the right hon. and learned Member address himself to this question? As I understand, he is saying that because of the "do it yourself" boom, or whatever is the right thing to call it, it would be wrong to have a different rate of tax for cathode ray tubes than for television sets. After all, the tubes are only one part of the set. How does he reconcile that argument with the one we have just heard from the Financial Secretary, who justified wool cloth being tax-free while tax was paid on wool clothing? On that argument it would, and it does, pay people to make their own clothes from wool cloth and thus avoid tax. What is the difference between making up wool garments and making up television sets?

The Solicitor-General: It is the right hon. Gentleman's own experience that he has come to this House in funny suits which did not wear so well. I should say that making a television set would be extremely difficult, but that making a suit would be abominably difficult. Without going into the relationship between bespoke tailoring and television sets, where the matter is made as easy as possible for the components to be assembled, I should have thought there would be more risk to the Revenue where a series of components could be bought separately and made up into a complete television set than to assemble a suit from separate parts, which would be a very difficult matter.

Mr. Wilson: Does the right hon. and learned Gentleman realise that he is laying the Revenue open to the most wholesale possible avoidance? From next Friday morning we shall be seeing advertisements in the Press for assembling "do it yourself" suits, where the suit


will be all ready cut out and all one need do is to stitch it together.

The Solicitor-General: If the right hon. Gentleman's modesty will permit him to wear a suit made by me I will be content to wear the risk. I must move on to the gramophone record.
If I were to compete with the lyrical description of the cultural value of music and go back to Plato and Aristotle with the hon. Member for Stoke-on-Trent, Central (Dr. Stross), I should lose the battle. I would not attempt it. The problem is not, as I see it, the exclusively cultural and enjoyment value of music, but the right way to bring into and govern under Purchase Tax this distinct class of music, which is distinguished from the musical instruments to which the hon. Member for Birmingham, Northfield (Mr. Chapman) referred. With the musical instrument, the musician tries, and sometimes succeeds, himself to produce the music. With all the rest of the range of the disc group, Group 19, we are dealing with instruments which reproduce music already made and not produced by the musician on the spot.
I am sure that the Committee will realise how difficult it is fiscally to separate gramophone records, radio gramophones and television sets which are sometimes built into the same instrument or equipment. From a fiscal point of view to pick them out and treat them in a different category would be very difficult. I fully appreciate that we can get the most glorious records of classical music, but I say at once, in answer to the hon. Member for Northfield, that we have no reliable evidence that the production and sales of the best classical records are adversely affected by Purchase Tax in any way. We do not seem to have that evidence at the moment. I was listening with great attention to what he said about his fears on that account. I can only say that at the moment we have nothing to justify any suspicion that that is going on.

Dr. Stross: Would not the Solicitor-General agree that, where there is no tax, as in the United States, for what is described as the price of a meal long-playing 12 inch records are available and that it is there accepted completely that the cheaper they are the more popular they are, and that more people are listening

to the best music than ever before in history?

The Solicitor-General: The hon. Gentleman, who so eloquently states his reasons for appreciating good classical records, will surely appreciate the fiscal difficulty about this. How could we try to treat differently the records from the other objects that are in the group? The hon. Member will see that the feature of this group is reproduced music as opposed to the musical instrument, where the musician makes music himself. If we were to admit gramophones to a special rate, or exempt them, we should have to let the rest of the group go. It is too costly a proposition to produce that result with a whole group. That is what I was at pains to say that we cannot accept.
The hon. Gentleman was putting the point that about 20 per cent. of gramophone record sales in this country are of what he would call good music. I do not desire to be snobbish about this at all, but the bulk of the gramophone record returns to the Revenue in this field come from records that I suspect the hon. Member for Northfield would think were not exactly good. I think they are described as "popular" discs.

Mr. Nabarro: Skiffle.

The Solicitor-General: My hon. Friend no doubt is more familiar with skiffle than I am. If, on a purely cultural basis, if that were fiscally possible, we desired to make a special exception in this field, there would be the greatest difficulty in taxing that which was not gold in the disc field and eliminating in a special way that which was cultural and essential. Clearly, that would be a difficult fiscal matter.

Dr. Stross: That would be a dreadful thing to try to do and I am sure that no one would attempt it. It would not succeed. All of us when we were very young were fed on pap, but we learned to eat meat when we grew up. We should not be afraid of skiffle, even if the hon. Member for Kidderminster thinks it is music.

The Solicitor-General: I was not for a moment sneering at the word "skiffle" but I was envious of the eternal youth of my hon. Friend the Member for Kidderminster and his remarkable vigour at a late hour of the night.
From what I have been saying I hope the Committee will understand that there are sensible reasons, in no way opposed to the enjoyment of music and culture, which compel my right hon. Friend to say that he cannot accept this Amendment.

Mr. H. Wilson: The Committee will want to offer every sympathy to the Solicitor-General, whose interventions in past year's debates have always been helpful on legal matters on which he is called upon to advise us, but I think it very unusual to employ a Law Officer for discharging a task which, normally, is discharged by one of the Treasury Ministers. The Paymaster-General has been sitting here for some time. I am surprised that he did not bring his great knowledge of these tax questions to bear on this debate, instead of the unfortunate Solicitor-General having to do so.
I say to the Solicitor-General that, despite his new-found association with the City of London—I am sure that he hopes to be associated with the City of London—on his showing tonight he will not make a very good financial Minister. [An HON. MEMBER: "Ask him why he left York."] Certainly not. I am not going to ask him why he left York. It would be strictly out of order to do so. The burden of his argument was that he cannot alter the rate of tax because everything is in and it must be formal and tidy. He will be the absolute dismay of the hon. Member for Kidderminster (Mr. Nabarro).

Mr. Nabarro: I am sorry, I did not get that.

Mr. Wilson: The hon. Member has not got anything all day. He can read it in the OFFICIAL REPORT. I am sure he will find it very illuminating.
Like other hon. Members who have spoken, I feel that this debate has been lifted higher than the normal level of Finance Bill Committee debates by the speech of my hon. Friend the Member for Stoke-on-Trent, Central (Dr. Stross). The small number of hon. Members in the Chamber at that time were deeply impressed by what he said. Like the Solicitor-General, I could not compete with my hon. Friend. I do not propose to address myself to the questions raised by the tax on gramophone records and I can tell the Chancellor that we do not intend to divide the Committee on that Amendment.
I want to say a word or two on the cathode-ray tubes, on which my hon. Friend the Member for Glasgow, Govan (Mr. Rankin) made such a weighty speech. We all remember how, in past debates, my hon. Friend has dealt with the monopoly aspects of cathode-ray tubes. He has been very persistent. Indeed, I think I can say that it was largely due to his persistence that the matter was originally referred to the Monopolies Commission.
11.0 p.m.
It is possible to produce arguments against reducing the tax on cathode-ray tubes, although I did not think that those of the Solicitor-General were very convincing. He had obviously read his brief with great skill. I do not think that he had applied himself very much to the problem before he saw his brief, but he dished up his Departmental brief very agreeably, but, as I say, not very convincingly.
It is a fact, as my hon. Friend proved, I think, to the satisfaction of most hon. Members who heard him, that the cathode-ray business involves, even today, excessive prices and excessive profits. He made a very weighty point when he was able to show the Committee that the Treasury now takes a higher proportion in Purchase Tax than before the changes were made two or three years ago—

Mr. Rankin: And I got no reply.

Mr. Wilson: And that point was not dealt with by the Solicitor-General.
Our reason for pressing this Amendment is rather wider, and, in a sense, our vote on it will be a token vote, because we feel that the Government should deal with the question of cathode-ray tubes and television servicing, which is becoming a major racket here. We all know what happens. Unless one is an expert on television matters—and my degree of expertise rivals that of the Solicitor-General, and no more—and anything goes wrong with the set, one sends for someone to look at it, and one is invariably told that one needs a new tube. Who knows differently? Who can tell the difference? As often as not if they put in a "new" tube it is not a new tube at all, but a reconditioned one—and heaven knows what happens to the tube taken from the set. It probably needs only a pound or two spent on it and is then put into another set. One has only to think what happens to the old people,


the bedridden people, the lonely people—the old-age pensioners, whose relatives may have given them a set. There is a major racket going on, and, on the racket, the Treasury exacts this high rate of Purchase Tax.
I am not suggesting that the reduction that the Amendment proposes would deal with that racket, but I do suggest to the Chancellor that he should say to the manufacturers that he is prepared to reduce the rate of the tax if they will put their house in order in the matter of television servicing. I recall buying a television set some three years ago. The tube "went" wrong within the period of guarantee, and when I asked the firm to look at it I was told that there was nothing wrong with it—until the set was out of guarantee, when I was told that I needed a new tube. I complained. The man looked at it for about half a minute, and told me that it would cost me 30 guineas for a new tube, plus a guinea for his looking at it.
As it happened, I knew the chairman of the firm that made the set and I complained to him. He sent an inspector round, who looked at the set, laughed, and said, "A connection has slipped." He put that right and I had no more trouble. Had I done it through the retail shop I would have paid the 30 guineas, plus the Purchase Tax to which I am now addressing myself. As I say, I was fortunate in that I was able to ask the chairman of the firm to have the matter dealt with.
How many people are in that position? I think especially of old-age pensioners, or, perhaps, an old lady living by herself and having a television set. She is told that she needs a new tube for the set. What can she do? She has to pay the guinea inspection fee, and this sort of thing happens. Therefore, I hope that the Chancellor will look again at this matter. I hope that he will say to the television manufacturers that he wants

them to set up in each area an independent inspector who has no vested interest in the repairs that might be needed.

The private firms have such a vested interest. The retailers have every incentive to say the set needs a new tube, the cost including this 60 per cent. tax. I therefore hope that the Chancellor will say, "I am prepared to look at this, and to reduce the tax on the tube, provided the industry will appoint independent inspectors who can be called in and paid, say, 15s. for a second and independent opinion, which is not affected by people who have any financial interest in the outcome of the inspection".

I should be out of order if I were to relate this to hire purchase, and I will not do so, but there is an obvious connection there between the facilities for hire purchase and the servicing business.

Therefore, knowing what a racket there is, especially in the disposal of secondhand television tubes, I hope that the Chancellor will ensure that people do not pay tax on what are, in effect, secondhand tubes, which ought not to be taxable, and will also deal with the problem of the racket in television servicing. If he does he will earn the gratitude of very many people. I could give the right hon. Gentleman details of old-age pensioners who did not have their television sets right throughout last winter because they were told that they needed new tubes—whether they really did or not I do not know—and could not afford them.

The Chancellor will earn their gratitude and that of many other families if he deals with the racket, and we suggest that one way in which he can deal with it is by making a conditional reduction in Purchase Tax.

Question put, That those words be there inserted:—

The Committee divided: Ayes 138, Noes 179.

Division No. 135.]
AYES
[11.6 p.m.


Ainsley, J. W.
Butler, Mrs. Joyce (Wood Green)
Delargy, H. J.


Albu, A. H.
Callaghan, L. J.
Diamond, John


Bacon, Miss Alice
Champion, A. J.
Dodds, N. N.


Baird, J.
Chapman, W. D.
Dugdale, Rt. Hn. John (W. Brmwch)


Bence, C. R. (Dunbartonshire, E.)
Chetwynd, G. R.
Dye, S.


Benson, Sir George
Coldrick, W.
Ede, Rt. Hon. J. C.


Blackburn, F.
Collins, V. J. (Shoreditch &amp; Finsbury)
Edwards, Rt. Hon. John (Brighouse)


Boardman, H.
Corbet, Mrs. Freda
Edwards, W. J. (Stepney)


Bottomley, Rt. Hon. A. G.
Craddock, George (Bradford, S.)
Evans, Albert (Islington, S. W.)


Bowden, H. W. (Leicester, S. W.)
Dalton, Rt. Hon. H.
Fernyhough, E.


Boyd, T. C.
Davies, Ernest (Enfield, E.)
Fletcher, Eric


Brockway, A. F.
Deer, G.
Foot, D. M.


Brown, Rt. Hon. George (Belper)
de Freitas, Geoffrey
Forman, J. C.




Fraser, Thomas (Hamilton)
Kenyon, C.
Redhead, E. C.


Gaitskell, Rt. Hon. H. T. N.
Lawson, G. M.
Rhodes, H.


George, Lady Megan Lloyd (Car'then)
Logan, D. G.
Robens, Rt. Hon. A.


Gibson, C. W.
Mabon, Dr. J. Dickson
Roberts, Albert (Normanton)


Gordon Walker, Rt. Hon. P. C.
McGhee, H. G.
Roberts, Goronwy (Caernarvon)


Greenwood, Anthony
McInnes, J.
Rogers, George (Kensington, N.)


Grey, C. F.
MacMillan, M. K. (Western Isles)
Ross, William


Grimond, J.
MacPherson, Malcolm (Stirling)
Short, E. W.


Hale, Leslie
Mallalieu, E. L. (Brigg)
Silverman, Julius (Aston)


Hall, Rt. Hn. Glenvil (Colne Valley)
Mann, Mrs. Jean
Silverman, Sydney (Nelson)


Hannan, W.
Mason, Roy
Slater, Mrs. H. (Stoke, N.)


Harrison, J. (Nottingham, N.)
Mayhew, C. P.
Steele, T.


Hayman, F. H.
Mellish, R. J.
Stewart, Michael (Fulham)


Henderson, Rt. Hn. A. (Rwly Regis)
Mitchison, G. R.
Stonehouse, John


Herbison, Miss M.
Moyle, A.
Stones, W. (Consett)


Holman, P.
Neal, Harold (Bolsover)
Strachey, Rt. Hon. J.


Howell, Denis (All Saints)
Noel-Baker, Francis (Swindon)
Stross, Dr. Barnett (Stoke-on-Trent, C.)


Hoy, J. H.
Noel-Baker, Rt. Hon. P. (Derby, S.)
Taylor, Bernard (Mansfield)


Hubbard, T. F.
Oram, A. E.
Thornton, E.


Hughes, Cledwyn (Anglesey)
Orbach, M.
Tomney, F.


Hughes, Emrys (S. Ayrshire)
Oswald, T.
Weitzman, D.


Hunter, A. E.
Paget, R. T.
Wells, William (Walsall, N.)


Hynd, H. (Accrington)
Palmer, A. M. F.
West, D. G.


Hynd, J. B. (Attercliffe)
Pargiter, G. A.
Wheeldon, W. E.


Irvine, A. J. (Edge Hill)
Parkin, B. T.
White, Mrs. Eirene (E. Flint)


Irving, Sydney (Dartford)
Pearson, A.
Williams, Rev. Llywelyn (Ab'tillery)


Isaacs, Rt. Hon. G. A.
Pentland, N.
Willis, Eustace (Edinburgh, E.)


Jay, Rt. Hon. D. P. T.
Popplewell, E.
Wilson, Rt. Hon. Harold (Huyton)


Jeger, Mrs. Lena (Holbn &amp; St. Pacs, S.)
Prentice, R. E.
Woodburn, Rt. Hon. A.


Jenkins, Roy (Stechford)
Price, J. T. (Westhoughton)
Woof, R. E.


Jones, David (The Hartlepools)
Price, Philips (Gloucestershire, W.)
Yates, V. (Ladywood)


Jones, Elwyn (W. Ham, S.)
Probert, A. R.



Jones, J. Idwal (Wrexham)
Randall, H. E.
TELLERS FOR THE AYES:


Jones, T. W. (Merioneth)
Rankin, John
Mr. John Taylor and Mr. Simmons.




NOES


Agnew, Sir Peter
Errington, Sir Eric
Lindsay, Martin (Solihull)


Aitken, W. T.
Finlay, Graeme
Linstead, Sir H. N.


Allan, R. A. (Paddington, S.)
Fletcher-Cooke, C.
Lloyd, Rt. Hon. Selwyn (Wirral)


Amory, Rt. Hn. Heathcoat (Tiverton)
Fort, R.
Longden, Gilbert


Arbuthnot, John
Freeth, Denzil
Low, Rt. Hon. Sir Toby


Armstrong, C. W.
Gammans, Lady
Macdonald, Sir Peter


Ashton, H.
Glover, D.
McKibbin, Alan


Atkins, H. E.
Glyn, Col. Richard H.
Mackie, J. H. (Galloway)


Baldwin, A. E.
Godber, J. B.
Maclay, Rt. Hon. John


Balniel, Lord
Goodhart, Philip
McLean, Neil (Inverness)


Barlow, Sir John
Gough, C. F. H.
Macmillan, Maurice (Halifax)


Barter, John
Graham, Sir Fergus
Macpherson, Niall (Dumfries)


Bell, Philip (Bolton, E.)
Green, A.
Maddan, Martin


Bevins, J. R. (Toxteth)
Grimston, Sir Robert (Westbury)
Marlowe, A. A. H.


Bingham, R. M.
Grosvenor, Lt.-Col. R. G.
Mathew, R.


Birch, Rt. Hon. Nigel
Hall, John (Wycombe)
Maudling, Rt. Hon. R.


Bishop, F. P.
Harrison, Col. J. H. (Eye)
Mawby, R. L.


Body, R. F.
Harvey, John (Walthamstow, E.)
Medlicott, Sir Frank


Boothby, Sir Robert
Heald, Rt. Hon. Sir Lionel
Milligan, Rt. Hon. W. R.


Boyle, Sir Edward
Heath, Rt. Hon. E. R. G.
Nabarro, G. D. N.


Braine, B. R.
Hill, Mrs. E. (Wythenshawe)
Nairn, D. L. S.


Braithwaite, Sir Albert (Harrow, W.)
Hobson, John (Warwick &amp; L'm'gt'n)
Neave, Airey


Brooman-White, R. C.
Holland-Martin, C. J.
Nicolson, N. (B'n'm'th, E. &amp; Chr'ch)


Browne, J. Nixon (Craigton)
Hope, Lord John
Oakshott, H. D.


Bryan, P.
Hornby, R. P.
O'Neill, Hn. Phelim (Co. Antrim, N.)


Burden, F. F. A.
Hornsby-Smith, Miss M. P.
Osborne, C.


Carr, Robert
Howard, Gerald (Cambridgeshire)
Page, R. G.


Chichester-Clark, R.
Howard, John (Test)
Pannell, N. A. (Kirkdale)


Clarke, Brig. Terence (Portsmth, W.)
Hughes Hallett, Vice-Admiral J.
Partridge, E.


Cooke, Robert
Hurd, A. R.
Peel, W. J.


Cooper, A. E.
Hutchison, Michael Clark (E'b'gh, S.)
Peyton, J. W. W.


Cooper-Key, E. M.
Hyde, Montgomery
Pike, Miss Mervyn


Cordeaux, Lt.-Col. J. K.
Hylton-Foster, Rt. Hon. Sir Harry
Pilkington, Capt. R. A.


Corfield, Capt. F. V.
Irvine, Bryant Godman (Rye)
Pitman, I. J.


Craddock, Beresford (Spelthorne)
Jenkins, Robert (Dulwich)
Powell, J. Enoch


Crosthwaite-Eyre, Col. O. E.
Johnson, Dr. Donald (Carlisle)
Price, David (Eastleigh)


Cunningham, Knox
Johnson, Eric (Blackley)
Prior-Palmer, Brig. O. L.


Currie, G. B. H.
Jones, Rt. Hon. Aubrey (Hall Green)
Profumo, J. D.


Davidson, Viscountess
Joseph, Sir Keith
Rawlinson, Peter


D'Avigdor-Goldsmid, Sir Henry
Kerr, Sir Hamilton
Redmayne, M.


Deedes, W. F.
Kershaw, J. A.
Renton, D. L. M.


Digby, Simon Wingfield
Kimball, M.
Ridsdale, J. E.


Dodds-Parker, A. D.
Kirk, P. M.
Rippon, A. G. F.


Donaldson, Cmdr. C. E. McA.
Lancaster, Col. C. G.
Roberts, Sir Peter (Heeley)


du Cann, E. D. L.
Langford-Holt, J. A.
Rodgers, John (Sevenoaks)


Duncan, Sir James
Leather, E. H. C.
Roper, Sir Harold


Duthie, W. S.
Leburn, W. G.
Ropner, Col. Sir Leonard


Eden, J. B. (Bournemouth, West)
Legh, Hon. Peter (Petersfield)
Scott-Miller, Cmdr. R.


Elliott, R. W. (N'castle upon Tyne, N.)
Lindsay, Hon. James (Devon, N.)
Sharples, R. C.







Shepherd, William
Taylor, Sir Charles (Eastbourne)
Ward, Dame Irene (Tynemouth)


Simon, J. E. S. (Middlesbrough, W.)
Temple, John M.
Whitelaw, W. S. I.


Smithers, Peter (Winchester)
Thompson, Kenneth (Walton)
Williams, Paul (Sunderland, S.)


Spearman, Sir Alexander
Thorneycroft, Rt. Hon. P.
Williams, R. Dudley (Exeter)


Speir, R. M.
Thornton-Kemsley, Sir Colin
Wills, G. (Bridgwater)


Steward, Harold (Stockport, S.)
Tiley, A. (Bradford, W.)
Wilson, Geoffrey (Truro)


Steward, Sir William (Woolwich, W.)
Turton, Rt. Hon. R. H.
Woollam, John Victor


Stoddart-Scott, Col. Sir Malcolm
Vane, W. M. F.
Yates, William (The Wrekin)


Storey, S.
Vickers, Miss Joan



Studholme, Sir Henry
Wakefield, Edward (Derbyshire, W.)
TELLERS FOR THE NOES:


Summers, Sir Spencer
Wall, Patrick
Mr. Hughes Young and Mr. Gibson-Watt.


Sumner, W. D. M. (Orpington)
Ward, Rt. Hon. G. R. (Worcester)

To report Progress and ask leave to sit again.—[Mr. Amory.]

Orders of the Day — PIG INDUSTRY (LEVY)

11.15 p.m.

The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. J. B. Godber): I beg to move,
That the Pig Industry Development Authority Levy Scheme (Approval) Order, 1958, a copy of which was laid before this House on 30th April, be approved.
The House will recall that provision for the creation of the Pig Industry Development Authority was made in Part III of the Agriculture Act of 1957. The Reorganisation Commission for Pigs and Bacon recommended that such an organisation should be set up. The functions to be undertaken by the Authority, which are specified in the Agriculture Act, can be summarised as the promotion of technical developments in the production, processing and marketing of pigs and of pig meat. The Authority has been set up and the need for it to get ahead with this task is fully recognised in the industry. To do this needs money, and the purpose of this Order is to provide the Authority with the means of obtaining it.
The Reorganisation Commission recommended, and the Agriculture Act provided, that the Authority's funds should be raised by a levy on the industry. The Authority has been created to serve the whole industry, and it can be argued that, in fairness, contributions towards the cost of the Authority's work ought to be made by all sections of the industry. In seeking a practicable scheme, however, the Authority was faced with three main problems.
The first is that the industry is a very complex one, and that to collect equitable shares from all the producers, dealers, processers and others concerned

Committee report Progress; to sit again Tomorrow.

in it would be a formidable task. The second is that until it has an income, the Authority cannot set up an organisation which would be necessary to negotiate and implement any complicated scheme. Thirdly, and perhaps most important, any such negotiation would inevitably take a long time and would seriously delay the Authority in getting on with its job.

The Scheme set out in the Order has the special virtue of being simple in its essential features and in its administration. If the Order is duly approved, the Authority will start to accumulate income at the beginning of next month. The Scheme provides for a charge to be payable to the Authority by every person who presents a pig for certification under the Fatstock Guarantee Scheme—in other words, every person who is eligible to receive a payment under the price guarantee arrangements for pigs. This person may be the man who actually reared the pig, or he may be somebody else—for example, a butcher or the Fatstock Marketing Corporation—who has bought the pig at a price including the amount of the guarantee payment which will be made on the pig.

With the number of pigs on which guarantee payments are now being made, the proposed rates of charge would give the Authority about £470,000 a year. This is rather less than the Reorganisation Commission thought would be necessary for the discharge of all the functions which it recommended the Authority should undertake. But the Authority considers that income at this rate will be sufficient for the first year or two of its existence, and I have no reason to dispute its assessment. It may be that more money will be required as the Authority extends its activities, and I know that it intends to examine the possibility of alternative methods of


collection for possible adoption at a later stage.

The amount, therefore, is 2d. a score, of which the share will be 1d. a score paid by the producer and by the processor. That is the rough way in which it it is shared, and I think that is a reasonable basis on which the Scheme should start. Some may think that in the light of what was said by the Reorganisation Commission these figures should be increased, but I think it is important that the scheme should start on a sound basis and that it should be introduced at an early date.

If there are any points which arise from what I have said, I shall be happy to deal with them.

11.21 p.m.

Mr. A. J. Champion: On this side of the House, while not thinking for one moment that the Act of 1947, particularly the Sections dealing with this industry, will provide—[HON. MEMBERS: "The Act of 1957."] I beg hon. Members' pardon. I have got the Act of 1947 so much on my mind as a result of discussions that we have been having on a Bill in Standing Committee, that I find it difficult to remember that we had an Act of 1957 under which this Order is made.
As I say, we do not regard the Act of 1957 as providing the final answers to all the problems of this industry. We recognise that this Authority may be able to do some useful work, and we do not propose to oppose this Order, which may give some satisfaction to those who are now waiting to go home.
We recognise that to carry out the functions under the 1957 Act it is necessary that we should pass this Order and give the Authority the money with which to do the tasks which have been laid upon it. I must say that I have some doubts about the amount which the Joint Parliamentary Secretary mentioned. It seems to me that £470,000 in the first few years is not enough to perform a task which has to be urgently tackled, as this has to be.
I want to know whether the Parliamentary Secretary has consulted the Authority and is able to assure us that this will be enough for the Authority to enable it to get down immediately to what I regard as one of the biggest tasks facing it, namely, large-scale progeny

testing. This is one of the first things that must be tackled, and it should be done on a fairly large scale for it to be of benefit to the industry within the immediate foreseeable future. It is a function which, if properly and urgently done, can lead to early results in the industry, and I urge the Parliamentary Secretary to assure himself that the Authority is getting enough money to enable it to get on with this function, and if not, to come back soon with another Order.
I am wondering, too, whether this is an adequate amount to enable the Authority to do something about the marketing and distribution of pig products, one of the items mentioned in the Third Schedule to the Act of 1957, which is of tremendous importance. The sooner this is tackled by the Authority the better it will be for the industry.
I should like the Joint Parliamentary Secretary to say how the Authority will avoid overlapping in the spending of moneys from the £470,000 in research. Has the Authority assured him that there will not be any overlapping with the research already being undertaken under the auspices of the Agricultural Research Service? Clearly, we do not want to waste any money on either side. We do not want to waste the money of those engaged in the pig industry and, certainly, we do not want to waste the taxpayers' money by overlapping with the Agricultural Research Service, which is also doing something about research into the pig industry.
Another question that I should like to ask is whether the money that we are now authorising will be sufficient to enable the Authority to apply the results of more fundamental research which is being undertaken elsewhere. In the business of agricultural research, it seems to me that we are extraordinarily good, as we are in some other directions, in pure and fundamental research, but are lacking in the technological side in the application of the results of fundamental research. Obviously, I cannot go into this deeply, but I should like to know what the Authority will do, and do fairly soon, with this money that we are granting to it in connection with the application of research to the industry that we are considering tonight.
It is neither the time nor the occasion to go deeply into this aspect tonight, but


the Select Committee on Estimates, in 1954, said that agricultural research was the result not of conscious policy, but of historical accident. What I am asking is whether by the granting to this Authority of power to raise money we are not adding another accident to agricultural research. Has this been properly thought out? Will the research that is conducted by the Authority fit into that conducted by the Agricultural Research Service?
I have read the Schedule, but I must admit that I do not pretend to understand the machinery for collection which it provides. That is nothing new to me in reading Orders and Schedules of this nature. In fact, that is my feeling about most of the Bills which I have to try to understand and assimilate. I hope that somebody understands them. By his explanation tonight, the Joint Parliamentary Secretary must have had an inkling of the meaning. Unless we have someone who understands it, there will be an unholy mess somewhere along the line of collection.
We on this side do not have much to say at this stage. We argued the matter fully when discussing the Bill which became the 1957 Act. We agree to give the Authority the money for the task which it has to perform and we wish it well in performing it.

11.28 p.m.

Mr. Godber: I am grateful to the hon. Member for Derbyshire, South-East (Mr. Champion) for the way in which he has approached the Order. I believe that I understand how it works. It is, in fact, relatively simple, so much so that I am sure the hon. Member need not be so modest.
Briefly, the deduction will be made from the deficiency payment on the pigs at the rate of 2d. a score deadweight. That deduction will be made by my Ministry and be forwarded to P.I.D.A. That, however, will mean 2d. a score deadweight being deducted from the producer. To balance that, an additional 1d. will be added on to the price which the producer receives from the purchaser. So the producer will have 2d. knocked off and then receive an extra 1d. In fact, in the end he will have paid 1d. and the processer, or whoever buys the pig, will have paid the other 1d. That is really almost as simple as it could be,

and the Schedule, I hope, makes it even simpler than my explanation.
The hon. Gentleman asked me particularly about progeny testing. The Authority is taking over the work of progeny testing which was started by my Ministry, and it estimates that its expenditure on existing work which it is taking over on progeny testing, pig recording, and premium grants, will amount to about £186,000—a considerable sum of money. This follows the expansion which my Ministry had initiated before P.I.D.A. was set up. This is a useful stage in the process, though I agree with the hon. Gentleman that there may well be justification for expanding. We should not belittle the work which is already being done, and I am sure he did not wish to do so.
There is, clearly, still scope for increases, and, as and when the occasion arises, there may be a case for increasing the levy. At the present time, however, on the estimates which the Authority has, it has available for additional functions it is planning to carry out—according to the budget it has prepared and on the rates proposed—another £180,000 or so for expansion in various directions. I think that it is adequate for the initial stages of the Scheme.
The hon. Gentleman referred to marketing and distribution, relating his remarks to the Third Schedule to the Act. He said that it seemed a little ambiguous, but I am sure that the hon. Gentleman realises that the Authority will not itself take part in marketing and distribution.

Mr. Champion: In research.

Mr. Godber: Research into those problems, certainly, yes; but if it were to go into marketing and distribution, it would need far larger sums. It certainly will go, as the hon. Gentleman rightly suggests, into research in that very important subject.
As to overlapping with existing research services, I am confident that that will not take place. There is the closest possible liaison in these matters. The Authority has not yet taken over any of the actual physical research work going on, and it will keep in the closest touch with the A.R.C. in relation to the fundamental research which the hon. Gentleman referred to, and it is very important that it should. I think it right that the A.R.C. should continue in its


fundamental research work but that P.I.D.A. should be very closely in touch. We shall certainly take heed of the hon. Gentleman's wise words in saying that there should be no overlapping.
I have sought to answer the points which the hon. Gentleman made. I am grateful to him for the welcome he gave to the Scheme. I believe that it is largely welcomed by those concerned in the industry, who all realise that a great deal of work has to be done. I hope the House is willing to approve the Scheme.

Question put and agreed to.

Resolved,
That the Pig Industry Development Authority Levy Scheme (Approval) Order, 1958, a copy of which was laid before this House on 30th April, be approved.

Orders of the Day — AGRICULTURE (PLOUGHING GRANTS)

11.33 p.m.

The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. J. B. Godber): I beg to move,
That the Draft Ploughing Grants Scheme, 1958, a copy of which was laid before this House, on 6th May, be approved.

Mr. Speaker: This Scheme and the next Scheme seem to be identical, one applying to Scotland and one to England and Wales. The language is a little different, but the effect seems to be the same. Perhaps they could be taken together.

Mr. Godber: I am grateful to you, Mr. Speaker, for that suggestion.
I am proposing to deal with the Scheme for England and Wales, but if there are any special points relating to Scotland my noble Friend will be glad to deal with them. This Scheme, which is the eighth one to be made under the Agriculture (Ploughing Grants) Act, 1952, reenacts the previous Scheme, apart from the necessary advances of dates. There are no other changes at all. The House will wish me, perhaps, to give one or two brief comments.
The House will remember that the Scheme was modified last year in two respects, to include grass as a crop for the sowing of which permission was no longer necessary, and to bring forward the qualifying date for old grassland under Part II of the Scheme from 4th May, 1939, to 1st June, 1946. No further changes are called for this year, and we

wish, so far as possible, to avoid successive changes in a Scheme which is by now well-known to farmers.
It would be premature, moreover, to make further changes in the Scheme until we have received the report of the Committee of Inquiry into Grassland Utilisation, which was set up last September under the chairmanship of Sir Sydney Caine, and will report later this year. For this reason, we have not thought it appropriate to make any changes in the Scheme this year. It is somewhat early to assess the effects of the changes made last year. There has been no marked change in the amount of old grassland coming forward under Part II of the Scheme. The slight decline in England and Wales has been counter balanced by an increase in Scotland and Northern Ireland.
Regarding the abolition of the reseeding proviso, there has, as one would expect, been some switch from tillage to temporary grass in 1957 as compared with 1956, but this no doubt reflects in part the fact, as I told the House last year, that we had been granting reseeding certificates freely for some time. The abolition of the reseeding provision has undoubtedly contributed to one of the major objects of the Scheme, that is to encourage the practice of ley farming.
Cultivations and sowings were both adversely affected by the spring drought last year, which accounts for the increase of 94,000 acres of bare fallow at the expense of tillage. There was, further, a reduction of 215,000 acres of tillage in the United Kingdom as a whole, which was offset by an increase of 223,000 in the area of temporary grass. There was thus a net decline in arable of some 86,000 acres. Of this, 71,000 acres were accounted for in Northern Ireland, so that for the rest of the United Kingdom the change was infinitesimal.
The 1958 figures will not become available until we have the results of the June returns, but from present information I would say that there will again be no great change. Ploughings recovered very well after September, except in Northern Ireland where there is no autumn ploughing. Conditions have been rather difficult this spring. In general I think that it may be said that we are maintaining a reasonable degree of stability in the area under crops and grass. This is a fundamental objective of our agricultural


policy and there is no doubt that the ploughing grants are a major instrument in achieving it.

11.38 p.m.

Mr. Thomas Fraser: We shall not oppose these Schemes, but if one dislikes them very much I think one should make that clear. I have never liked these ploughing grant schemes or the Act under which they were made. I have made it clear before now that I was not very fond of these grants when they were made by the Government of which I was a member.
I well remember when the relevant Act was passed. The justification for it was not the encouragement of ley farming, as the Joint Parliamentary Secretary has said, but the getting of an increase in tillage acreage so that we might produce more foodstuffs from home sources and save expenditure of precious dollars in buying foodstuffs from America. It was anticipated that there would be a great increase in tillage acreage following the introduction of the first Scheme under the Act, which there was. The Joint Parliamentary Secretary will know that I risked prophesying at the time that there would be an increase for two years or so and then there would be a steady decrease once again. That had happened when a similar Scheme was introduced in 1947. My prophecy was not very clever, but it was right, and there was this run-down.
How does the Joint Under-Secretary justify this Scheme? One of the justifications each year has been that the grants provided for here are included in the settlement made at the Price Review. If the money were proposed to be given in this way and the global settlement were adhered to, an increase would have to be given in deficiency payment. I appreciate that. If that is the reason, it is always difficult for an hon. Member to oppose it.
These Schemes make no substantial difference to the amount of acreage put under the plough each year. If our farmers follow the rules of good husbandry and if there is a proper rotation of crops, these Schemes will not add to our arable acreage. In any case, following the Scheme of last year, it is now possible to put the land straight down to grass without seeking permission of the Minister. There is now no insistence

upon putting the land that is ploughed into grain crops to produce the feeding-stuffs which otherwise would have to be brought across the Atlantic.
I fully appreciate that, with good ley farming, grass is cultivated as a crop, but I suggest that if our farmers know their job—I have no reason to believe that they do not—they will have a constant rotation of crops. They will have three or four years in grass and another three or four years in crops. They will be cultivating grass as a crop without these Schemes at all.
I notice that the tillage acreage is still going down. In the early years of the Scheme, the justification for another Scheme each year was the increase in the tillage acreage achieved the year before. For some years it has not been possible for any Minister to say, "Look at the increased acreage last year; that is all due to these Schemes." All that Ministers could do was to say that if there had been no Scheme there would be a bigger acreage. I doubt that very much.
We are told that this is of great value to the small farmer, but I do not think it influences him very much in his farming. I have the impression that most of the money is collected by the bigger farmer who works on a large scale. I believe we are misleading ourselves in saying that these Schemes are costing about £3 million if a quarter of the money is coming back in increased taxation paid by the big farmers.
I doubt very much whether these Schemes are justified. I wish we could assist agriculture in a better and more easily justifiable way than by this. I wonder whether the Joint Under-Secretary would say a word or two about the effect he thinks this Scheme will have in Scotland and about the continuation of the Scheme.

11.45 p.m.

Sir James Duncan: I have a certain amount of sympathy with the hon. Member for Hamilton (Mr. T. Fraser) when he says that the general ploughing grant is not really necessary because the good farmer, using normal rotation of crops, will farm his land and plough anyway.
It is impossible to oppose the Scheme, whether we like it or not, because it is all part of the Price Review. There may be a justification and balance between direct


subsidies, plus supports and direct production grants, including grants for land on ley farms. I want to register one slight note of dissent from Part II of the Scheme. I believe that part should continue. In Great Britain we are losing a very large acreage of agricultural land every year. No one knows how much it is, but it is something in the region of 5,000 acres in Scotland. We have to make that up in some way, either by increased production from land already in cultivation, or by breaking up new land on the hillsides.
There is one new feature under the 1957 Act and the Farm Improvement Scheme. Grants under improvements schemes stop before the land is ploughed. One can root up trees and remove rocks, but when it comes to ploughing the grant stops. Therefore, it is all the more important to have reclamation schemes to give additional production. This is the ideal form of assistance for ploughing this land which has never been ploughed in the history of man. There are acres in Scotland which have not been ploughed since the agricultural depression of last century. We can make up for the loss we have to suffer through the modern demands on our land.
I urge, firstly, that the £12 subsidy is worth consideration on its merits. I like the second part of the Scheme, which should be valuable to farmers who are doing reclamation of land, in addition to the one-third grant under the Farm Improvement Scheme. In addition, I believe there is something to be said in favour of the second part of the Scheme, because I believe it will help farmers with small acreages to plough and reclaim. I do not say this is always necessary on a small farm, because some hill farms are fairly large. That does not necessarily mean that the farmer has a large, rich farm, because much of his land may be poor. Whether we call him a small farmer or a farmer with a small income, I believe this would help him.
The hon. Member for Hamilton does not seem to have realised the amount of good that can come from having the subsidy under Part II of the Scheme. That would help the upland farmer who ought to get the benefit of the £12 scheme for land reclamation in small areas and will help to redress the losses we are suffering through housing schemes and other demands on our land.

11.50 p.m.

The Joint Under-Secretary of State for Scotland (Lord John Hope): The hon. Member for Hamilton (Mr. T. Fraser) has asked me to say a word as to why we think this Scheme is still justified. I do not want to detain the House, except to say that I think it is fair to claim that, on the whole—and one has to judge all these things on the whole—the Scheme does provide a stimulus to plough that is definitely useful.
There is one figure I should like to give that could at least be said not to militate against the claim I have just made. Imports of feedingstuffs are still below the estimated pre-war level of 5·9 million tons, despite the fact that our output of livestock and livestock products is now forecast at no less than 52 per cent. higher than pre-war. That, of course, might have happened whether or not this Scheme had come into existence, but it is at least a pointer to the usefulness of providing what stimulus one can to ploughing. That is the basis of the Scheme, although I fully realise that one has to watch the whole situation.

Question put and agreed to.

Resolved,
That the Draft Ploughing Grams Scheme, 1958, a copy of which was laid before this House on 6th May, be approved.

Draft Ploughing Grants (Scotland) Scheme, 1958 [copy laid before the House, 6th May], approved.—[Lord John Hope.]

Orders of the Day — DEGREE COURSES (ADMISSIONS)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Bryan.]

11.53 p.m.

Mr. Malcolm MacPherson: I do not want to detain the Financial Secretary longer than I need after he has been so busily engaged in the somewhat more important debate we have had earlier today. I feel particularly apologetic if he has to go into this matter in great detail, because, if one goes into the ins and outs of it, it is quite as complicated as the Purchase Tax Clauses and Schedules in the Finance Bill. I spend a difficult period trying to follow the report of the Vice-Chancellors' Committee, and I hope the hon. and learned Gentleman has not had to do that in addition to reading


through the Purchase Tax Clauses and other parts of the Finance Bill.
At present, we are looking forward to the implementation of the Chancellor's statement of 20th February, when he envisaged an increase in university places by the mid-sixties to 124,000 plus a possible increment beyond that. We have now about 95,000 in our universities, but the places available are not enough. In making that statement I am in fairly good company, because a few weeks ago the educational correspondent of the Sunday Times said, bluntly:
There are not enough places for able boys in our universities,
and pointed out how much this fact worried headmasters, the able boys themselves, parents, administrators, and tutors at the universities.
A week ago, the other of the two "posh" Sunday newspapers—to use the phrase of the angry young man—the Observer, carried an article by Robin Pedley in which he said very much the same thing; that the universities are being flooded with applicants for whom they cannot find places.
The first thing I want to say is that we should try to make some sort of estimate of what numbers will be coming forward as qualified applicants for university places each session. We can then at least put that against the capacity of the universities, even though, as the hon. and learned Gentleman says, there is not an exact number of places. I know this may be difficult, and it is probably extremely complex, but I should like the hon. and learned Gentleman to express an opinion on the possibility.
In the session 1955–56 there were admitted to the universities about 25,000 students. A considerable group of other applicants were promised admission after a wait of a year or more. About 2,000–2,500 who were qualified in the sense of having London University entrance qualifications were not admitted at all, then or later.
The situation is serious when we remember that those 2,000–2,500 students are qualified and could have taken university courses had these been available to them, and when we remember how much importance we attach to enabling all students who are able to do so to go on to a university. The whole point of this debate is that this figure

is big enough to demand a great deal of attention from the Government; but I am not sure it is getting it.
In respect of the period from 1955 to the present session of 1957–58 there are no figures of which I know which indicate whether there was a corresponding number of qualified applicants who were not admitted. The one thing that we are told in general reply when we raise the problem is simply that in the mid-sixties there will be 124,000 places. But it really is no answer to say that in, say, 1965 there will be so many places. In 1955, we had this number of non-admittances, and there may be an equal number of non-admittances each year from 1955 to 1965. There may indeed, even after the expansion, still be a number of qualified applicants who are not able to gain admission. As a matter of national policy, it seems to me that the 1955 number is big enough to call for attention from the Government.
What does the situation require—to use a phrase with which we used to be familiar in a well-known advertisement? There are one or two points which I should like to note before suggesting some specific things that ought to be done. The first thing that the situation requires is that the Government should recognise the importance of the problem and should look at it as an important problem. It is not simply a question of increasing the number of university places. That is a desirable thing and a major object of policy. There should be an attempt to increase the number of university places, or make other provision, in such a way as will enable all who are qualified to pursue a degree course.
One asks the obvious questions about a number left over like this. How many of them would have made a first-rate contribution as graduates to our national life? How many of them would have taken their places in the work of science and technology, which we want to increase and expand so much? To what extent with such a figure of non-admittances are pupils discouraged from staying on at school and parents and headmasters discouraged from urging them to do so? That is another element in policy which we have been trying to stress for some years.
After the Government have recognised the importance of the problem, they


should consider the question of providing some information about it. It is not very satisfactory that one should be working in 1958 on figures dating back to the beginning of the 1955–56 session; and they are an estimate at that. I know the difficulty of finding the figures. I am not trying to say that figures can be provided easily. But I am asking the hon. and learned Gentleman to give his attention to the question.
In particular, I think we ought to have some information session by session if it can be made available. Is it, for instance, the case that there will be a number of qualified students not admitted in the coming academic year? The Sunday Times says emphatically, "Yes." The Observer also says "Yes." The Chancellor of the Exchequer the other day said "Yes." This is a matter of great importance, and it raises the question of what are the numbers involved and what should be done.
The Treasury ought to focus the question and analyse it and work out some method of trying to enable these students to embark on degree courses. This involves the question of how far the Treasury is responsible. Both the Chancellor and the hon. and learned Gentleman have said in effect that this is the responsibility of the universities and not of Ministers. That is all very well. I have great respect for the universities. I would not want gratuitously to criticise them. But there is not only the interest of the universities concerned here, or only the interests of the students. There is a considerable public interest.
It is a matter of public policy that qualified students should be enabled to embark on degree courses. The Government, therefore, ought to take responsibility in the matter. They can jog the elbows of the universities, they can advise the universities, they can do a great deal through the University Grants Committee. It seems to me they should accept the responsibility.
Here are one or two specific things I suggest should be done, or, in our political jargon, steps I suggest should be taken. In the first place, I think there is a problem connected with the number and size of grants. Many of these people would have attended university courses had it not been that financial considerations kept them back. I do not pursue

that any further, because it is such a very obvious point.
The next point is that the inquiry which the university authorities are now conducting into the possibility of clearing arrangements seems to me essential and, if possible, should be speeded up. The lack of places in 1955 was more apparent than real. We had 2,000 to 2,500 qualified non-admittances, but we also had about 2,500 vacant places after that university session had started. The two figures do not correspond; but in all likelihood a number of the 2,000 or 2,500 could have been fitted into vacant places. How many, one does not know; possibly only one-third or one-quarter, possibly one-half or three-quarters or four-fifths. At any rate, clearing arrangements would have fitted some of them in, and that does not seem to me to be entirely a matter for the universities themselves. It is a matter also in which the public interest is deeply involved.
The third point is this. In the London area there is a good case for special clearing arrangements. Even if they could not be established nationally in time for next session. I think they could in the London area, which has a pretty complex problem, be fairly quickly established.
Fourthly, there are or have been at a number of technical colleges, particularly in the London area, degree courses which in many cases have been closed down and in other cases are running with very few students.
This is a paradoxical situation. I do not claim that the technical colleges should, as a long-term policy, run degree courses, but in the present circumstances they definitely should do so. Those which run courses now should have their facilities taken up fully. They should not be running courses with only a few students. Those colleges with experience of running courses in the past should be encouraged to run them again. The Ministry of Education is, apparently, not inclined to take that line. The Ministry got the colleges to close down some courses because they found there were not enough students. At present, the students are available, and it would seem reasonable that they should, therefore, re-open closed courses and fill up those courses which are only half full.
These are one or two practical steps which should be taken. I have tried to


put the question simply, without going into all the complexities. I come back to the point which is of serious import to the nation: that all students who wish to enter university who have the qualifications to enter a degree course should find a place in such a course.
I am sorry that in his reply the other day the Chancellor of the Exchequer rather blurred the question of entrance qualifications. He is one Minister whom I would find it difficult to criticise. He is usually most helpful and obliging to the House. I cannot understand why he introduced the question of A level passes. This did not come in at all, because we had been talking on the basis of the hon. and learned Gentleman's first answer to one of my questions, which put the matter on the basis of London University passes. It seems to me that we could leave out these complexities. There are a considerable number of people who are qualified, in the sense that they have London University entrance qualifications, who are not able to embark on a degree course and who should be enabled so to embark.

12.7 a.m.

The Financial Secretary to the Treasury (Mr. J. E. S. Simon): The hon. Member for Stirling and Falkirk Burghs (Mr. Malcolm MacPherson), with his usual courtesy and good nature, apologised for keeping me up to reply to this debate. I can assure him that he need not have done so. I fully recognise the importance of this subject. I know his very great interest in it, and his knowledge of its complexities. I assure him that the Government themselves recognise the importance of the matters which he has raised. But I cannot go the whole way with him as to what is the responsibility of the Government.
I called to mind while the hon. Gentleman was speaking what Disraeli once said to the House that
a university should be a place of light, of liberty and of learning.
I think that liberty is a very important part of what we conceive to be the proper function of a university in our British life. Therefore, when the hon. Gentleman says, to come to a detail, that the clearing arrangements are not entirely a matter for the universities themselves and that the public is interested, although I agree that the public is interested, this should not involve the corollary that the

Government should interfere. The clearing arrangements between universities are entirely a matter for the universities themselves.
I know that the hon. Gentleman does not think otherwise. But I think it worth while saying that the Government are not in a position, and nor should they be, to give orders to vice-chancellors. Nor are the vice-chancellors in a position to give orders to their universities. I know that the hon. Gentleman would not suggest otherwise, but occasionally the opposite conception tends just to colour some of his thoughts on these matters.

Mr. Malcolm MacPherson: I quite agree. I do not believe that the Government should give orders to universities. But it has happened in the past. I note particularly the Government's desire that universities should double their output of scientists after the war. The universities did that. They do carry out Government policy when it is put to them.

Mr. Simon: I entirely agree that there should be liaison between the Government and the University Grants Committee and between the University Grants Committee and the universities themselves. A primary function of the Government, as it seems to me, and as I think the hon. Gentleman himself recognised, is to make available funds to secure such expansion in the universities as is required to produce enough graduates to fulfil the function that we think graduates should fulfil in our national life in the future. That was really the fundamental tenor of the hon. Gentleman's observations.
There has already been a very encouraging expansion. When one looks at the figures that my right hon. Friend gave on 20th February, one should not at the same time lose sight of the fact that that is the continuation of a progress which is already in train. For example, in 1953–54 the number of undergraduate students admitted was 21,153, but in October, 1957, that had risen to 27,206. That is a startling increase considering the amount of building and expansion that has been required to accommodate them. Again the full-time students in universities was 80,600 odd in 1953–54; in October, 1957, it was 94,600.
The hon. Gentleman asked me to estimate what would be the requirements looking ahead. I would not like to prophesy specifically, because I think


there are certain factors which are more difficult to assess. At the moment and in the immediate future we have got the problem of the termination of National Service, which the hon. Gentleman knows has thrown a very great strain on the universities. That will solve itself, I think, in the next few years.
On the other hand, there are two factors which will operate later on. The first is that the full effect of the increase in the birth rate after the war will not be felt in the universities until about the middle of the next decade. The second—and it is this which makes it almost impossible to give any sort of accurate prophecy—is the uncertainty of the future of the present tendency of greater numbers of children to stay on at school and enter the General Certificate of Education at the advanced level. At the moment the number is increasing, and I think we all desire that it should continue to do so, but we do not know how far that tendency will continue; and, of course, that will be one of the most vital factors in the production of potential university students.
Faced nevertheless with at least the certainty that the increase in the birth rate will justify a larger university population by the mid-1960's, my right hon. Friend dealt on 20th February with the expanded university building programme, and I need not go into the details which he then set out because I know the hon. Gentleman has them very much in mind. As he said, they assume, in effect, an increase from about 90,000 students to 124,000 students. That is, I suppose, the largest increase in university building and population ever to be seen in the history of our universities.
That sum of money which my right hon. Friend the Chancellor announced would be available was in addition to the expenditure on the expansion of Imperial College. The hon. Member indicated that he was particularly interested in the progress of scientific education in the London area. The expansion of Imperial College, which is proceeding apace, will cost about £15 million and will finally provide for an expansion of student population from 1,650 to 3,300. That is, as I say, in addition to the programme that my right hon. Friend announced.
In addition, if the hon. Member looks in the Civil Estimates, Class IV, 12, at

the University and College Estimate, he will see that 92 major building projects costing about £24½ million were all begun before 1st December, 1957. About half will be completed this year and about another quarter in 1959–60. In money value, nearly £20 million worth of this £24½ million will be completed by the end of 1958–59. I hope that this, at least, will satisfy the hon. Member that the expansion has started and is continuing and that the programme announced by my right hon. Friend is no more than the continuance of a process which is already happily in train.
The hon. Member referred particularly to the question of "clearing" arrangements. As I have emphasised, that is purely a matter for the universities. I cannot help feeling that it would be improper for my right hon. Friend or myself to interfere with matters of that sort, which are peculiarly within the cognizance of the universities.

Mr. Malcolm MacPherson: In the London area, in particular, there are a large number of technical colleges, many of which still run degree courses. It does not seem to me that clearing arrangements would be entirely complete or proper if they did not involve these degree courses in the technical colleges. For that reason, it does not seem to be quite correct that they should be restricted to the universities alone.

Mr. Simon: I was about to add, as, I think, the hon. Member knows, that the vice-chancellors have the clearing arrangements very much under review. I told the hon. Member in answer to a Parliamentary Question a short time ago that they hope to have a report issued later in the summer.
Without dealing further with that matter, perhaps I could go directly to the last point made by the hon. Member concerning the technical colleges and their degree courses. The situation is much less melancholy than the hon. Member suggested, because there are now eight designated colleges of advanced technology and 40 recognised courses for the Diploma in Technology. That is equivalent to an honours degree course, which, I think, is what the hon. Member had in mind. Some 1,360 students are taking this diploma course, and. what is important, the number of


students in their first year is nearly double those in their second year. In other words, rather than a decline, there is a substantial increase. Some 740 students are in their first year. To date, a further 21 courses have been recognised for next September. That should lead to a substantially increased student intake of first-year students, possibly 50 per cent. more. I hope that if that does not fully satisfy the hon. Member, it will at least go some way to removing his misgivings.
As I say, I do not think that it would be right for me to interfere in any way with the clearing arrangements, but I will see that the vice-chancellors' atten-

tion is drawn to the suggestion which the hon. Gentleman has just made, that the review of the clearing arrangements between universities should be co-ordinated with a review of the comparable arrangements for the colleges of advanced technology.
I hope that the hon. Gentleman will be satisfied that, so far as matters lie within the proper sphere of the Government, we are conscious of the problem involved, which he so fairly stated, and we are taking proper steps to cope with it.

Question put and agreed to.

Adjourned accordingly at twenty-one minutes past Twelve o'clock.